Looking for a specific product?

Make a search for products & suppliers, articles & news.

Could Iran be the Next Big Market?

Iran is opening up for billions of dollars in oil and gas investments after the lifting of decades-long sanctions. The Norwegian oil industry is cautiously eyeing possibilities.

The Islamic Republic of Iran signed a historic agreement last year with the P5+1 nations (China, France, Germany, Russia, the UK, and the US) and the EU on Iran’s nuclear program that lifts sanctions for non-US companies.

 

The deal will allow for development of the world’s second largest holder of hydrocarbon reserves and one of the last major markets in the coming decades for new foreign oil deals. Iran will need $180 billion in investments over the next five years to reach its planned increase of production from 3.2 million barrels per day to 5 million by 2020, according to Euro Iran Business Consultants, based in Sandnes, Norway.

 

Norwegian business in Iran

Norway Minister of Foreign Affairs Børge Brende (left) at the signing ceremony in Tehran between Export Credit Norway and GIEK and the Iranian authorities last August. Photo: Frode Øverland Andersen/Norway Ministry of Foreign Affairs

 

Klondike Feeling

 

Firouz Ardeshiran, chairman at Iranian energy consultancy Namvaran P&T, expects there could be 15 offshore fields developed and over 400 wells drilled over the next few years. To achieve this, Iran will need foreigners willing to take the risk and provide research and development, technology, foreign finance, and engineering, procurement and construction project management.

 

“The expectation is that Iran is getting safer every day,” said Ardeshiran at DLA Piper’s conference “Iran Opportunities and Risks Post Sanctions,” arranged in Oslo last March in collaboration with Norwegian international oil and gas network-based organization INTSOK.

 

INTSOK is watching the situation closely. It recently coordinated a visit at the Iranian Oil Fair in Tehran last May – the first post sanction fair -- to meet with stakeholders, the National Iranian Oil Company, subsidiaries and private organizations. According to Werner Karlsson, INTSOK regional director Europe and Middle East, there has never been greater interest among its members for a new market as there is for Iran now.

 

“There is a Klondike feeling,” he said in an interview in Oslo after the Iranian Oil Show. “It is difficult times for the oil industry and there is a technological fit with Iran,” pointing to Caspian Sea deep water projects, improved oil recovery on old fields, environment and safety, and gas developments.

 

 

Challenges Ahead

 

However, there are concerns about re-entering Iran because of the history of sanctions and current sanctions in dealings with US companies. There are also worries over regulations, which require that 51% of all contracts have Iranian interests represented. Local content rules have been a “murky area in emerging markets for corruption,” said Joachim Naheem, program director at the International Law and Policy Institute (ILPI) at the DLA Piper conference.

 

Karlsson foresees that one of the biggest challenges for the moment is ensuring that international bank guarantees transferring of money from Iran. A recent breakthrough was the signing of a memorandum of understanding between Export Credit Norway and the Norwegian Exports Credit Guarantee Agency and their Iranian counterparts -- the Export Guarantee Fund of Iran and the Organization for Investment Economical & Technical Assistance of Iran -- that will facilitate financial cooperation between the two countries.

 

“Export financing makes it easier for Norwegian exporters to compete for contracts in Iran, as it provides a sales argument when marketing products and services abroad,” said Wenche Nistad, GIEK chief executive, regarding the signing of the agreement in Tehran last August. “Several other countries have already signed similar agreements, allowing Norwegian exporters to compete on equal terms.”

 

The next question is how soon the market can open for Western contracts. China, India, Korea and Russia filled the gap after European companies left the country due to sanctions. Much will depend on foreign oil companies finally signing the new Iran Petroleum Contracts, which have been delayed several times.

 

Dwellop

Norwegian company Dwellop has partnered with Gulf Marine Services on an innovative cantilever system for well intervention targeting new markets such as Iran. Source: Dwellop AS 

 

Norwegian Prospects

 

These concerns have not kept Norwegian firms from returning to Iran. Oil service company Aker Solutions signed a memorandum of understanding this March with Iran’s Research Institute of Petroleum Industry to cooperate on oil industry research. Norwegian company, Hemla Vantage, signed an agreement the same month with the Iranian IIC (Iranian Investment Company) through its Oman-based sister company Middle East New Energy to expand their trading operations of LNG, LPG and petrochemical products.

 

“Hemla and IIC are committed to their cooperation and are proud to be in the first in line to restart trading activities between their two countries,” said Hemla in a statement. “Norway and Iran have a long history of successful collaboration. Norway’s Statoil was involved in a project to develop Iran’s South Pars Phases 6, 7 and 8, which were completed in 2008. Another company, Norsk Hydro (now Statoil), was involved in the exploration of Anaran block in Western Iran.”

 

Hemla has already entered Iran through a joint venture with Kharg Petrochemical Company, for the capture of flare gas and conversion to LNG and LPG at Kharg Island. It also has a separate joint venture with the Tamin Petroleum & Petrochemical Investment Company.  

 

Another Norwegian company keen to explore new opportunities is a spin-off of Rolls-Royce called Dwellop that has developed a novel well intervention system. The Stavanger-based company recently signed an agreement with Abu Dhabi-based Gulf Marine Services (GMS) on its cantilever well intervention and work over unit system and is building one for GMS. The partnership will open up for new markets, such as Iran, where Dwellop recently received approval by two Iranian oil companies.

 

“We travelled to Iran one year before the sanctions were lifted,” said Helge Hustoft, Dwellop chief executive. “The national oil companies in Iran are interested in our solutions.”

Related articles

Latest articles

COST-CUTTING THROUGH NEW TECHNOLOGY

Technology has been imperative for the Norwegian oil adventure.  With high expenses and a focus on cutting costs, it may become even more important in the fight to secure the future of the Norwegian Continental Shelf....

Privacy Policy

We value your privacy. Read the details of our Privacy policy below.

Cookies information

Read our cookies information, specifying what they are and how they are used on NorwayExports.no. NorwayExports.no is owned by Media Digital AS.

Profitable Sustainable Fish Farming

Norwegian fish farmers are incorporating the UN Sustainable Development Goals into their business strategy. Even fish sludge could profitably save the environment. 

Digital Future: The New Maritime Sharing Economy

In the old days, ships left port and they hopefully arrived where they should. Now masses of data points and sensors are enabling a new maritime sharing economy.

Near-Zero Emission Technology to Power Platforms

Norwegian researchers are exploring near-zero emission platform technology using fuel cells combined with carbon capture to help meet climate targets.

Fish Vessels Go Electric

The Norwegian aquaculture and fishing industry has joined the green shipping wave with a number of pioneering electric fleet initiatives.

Norway’s Greener Future Fleet

Norway was the first nation to have a fully electric car and a passenger ferry. Now the country will make all future ferries green and a zero-emission maritime industry by 2050.

Could Iran be the Next Big Market?

Iran is opening up for billions of dollars in oil and gas investments after the lifting of decades-long sanctions. The Norwegian oil industry is cautiously eyeing possibilities.