At an industry gathering in Tehran, the Iranian Oil Minister, Bijan Zangeneh, said he is upbeat about the country’s prospects. But much of his hopes still depend on Iran’s ability to attract huge amounts of foreign investment – much of its Western – for the country’s oil and gas sectors. This is where Zangeneh’s ambitions meet real political obstacles at the hands of the hardliners.
Even if his team can provide commercially attractive terms to international oil and gas companies, which is in itself an obstacle in a slumped global oil market, he needs to convince all the key power-brokers in Tehran that his plans are worthwhile pursuing. Some hardliners have already called his plans “unconstitutional” and “soft” toward Western commercial interests.
And Zangeneh’s plans are ambitious. He wants some $200 bn in foreign investment, and about $134 billion for the upstream sector alone. This is where the oil is discovered and brought to surface, and where Iran is not only looking for the latest advances in technology for extraction but also the finances to support such efforts. Meanwhile, Zangeneh has eyed some $52 billion for investment toward developing Iran’s petro-chemical sector as part of a broader economic self-sufficiency agenda where the country will seek to add value to its economic output before exporting.
Incidentally, Iran’s large regional competitor for greater market share of the petro-chemical market is its archrival Saudi Arabia. And its here, in the political context, where Zangeneh plays his cards carefully. Whenever his courting of Western oil and gas firms comes under question by the hardliners in Tehran, the Iranian oil minister plays the nationalist card and appeals to the anti-Saudi sentiment that is so prevalent inside the hardline faction.
Zangeneh maintains that Iran can soon reach an oil production of 4.5 million barrels of oil per day, if adequate foreign investment is secured. This number represents a higher production level than what Iran had prior to the international sanctions. In his narrative, if the hardliners oppose his plans, they are guilty of strengthening Saudi Arabia’s hand.