Iran is not wasting any time to reclaim its global oil market share: production is already more than 3.8 million barrels a day and the government has just closed four crude supply contracts with European traders, including Spain’s Repsol, Greece’s Hellenic Petroleum, and Italian Saras and Iplom.
Shell and Total are also back in Iran as buyers of its crude oil, and Lukoil is back in the oilfields there. Things are looking up for the nation after years of crippling sanctions. Europe, in particular, will be more than happy to help Iran restart the full-scale development of its oil and gas reserves, as it desperately seeks to reduce the proportion of Russian oil and gas it uses (politics usually trumps common sense for some reason) and as most of its own oilfields near depletion.
Iran, for its part, will be more than happy to use this help, which is why it made an all-new contract for its future partners. The Iranian Petroleum Contract has come under fire from local parliamentarians but for now it still on the table.
The sensitivity about oil and gas reserve ownership that caused the controversy is easily understandable given Iran’s history with BP. On the other hand, it’s clear the country currently doesn’t have the technology and know-how to boost hydrocarbon production on its own. The ICP seems a pretty straightforward, mutually beneficial affair. It’s really hard to say who needs who more: Iran needs tech and new markets but Big Oil needs new reserves just as badly. It’s a marriage made in heaven — oil heaven, of course.
Sure, Saudi Arabia will have something to say about all this and it’s already saying it by raising its export prices for Asia but I think the kingdom is being much too confident and reluctant to acknowledge the new reality, despite the much-hyped Vision 2030.