TEHRAN — President Hassan Rouhani is racing to sign as many oil deals with Western companies as he can before hard-liners at home and President-elect Donald Trump have a chance to return the Mideast country to cultural and economic isolation.
At the same time, Iran is in a battle with Saudi Arabia and other OPEC producers to reclaim its position as one of the world’s leading oil exporters, a spot it lost during the years of international sanctions over Tehran’s nuclear program.
Iran’s oil industry, the lifeblood of its economy, was devastated by the cumulative effect of the nuclear sanctions, which halved petroleum exports and left the country ostracized economically.
The international nuclear agreement that lifted those sanctions nearly a year ago, one of the Obama administration’s signature foreign policy initiatives, has enabled Iran to partly recover. But Trump has warned that he may dismantle the deal, a threat that has injected new urgency into Iran’s push to build up its oil industry before Trump takes power next month.
A provisional agreement this week with Royal Dutch Shell to develop two of the country’s largest oil fields is the latest sign of interest in Iran from international energy companies. Over the past four weeks, Tehran has negotiated similar agreements with the oil field services giant Schlumberger and companies from China, Norway, Thailand, and Poland.
The deals, if completed, would bring much-needed expertise and foreign investment. Just as important, though, the agreements could provide a lifeline to the rest of the world, experts say, cementing relations with a number of European and Asian countries. That, they say, could provide an insurance policy of sorts against any punitive actions taken next year by the Trump administration and the Republican-dominated Congress.
Few Iranian officials like to acknowledge their country’s vulnerability, insisting it is immune to outside pressures. But the election of Trump and his selection of a national security team that views Iran as a major threat in the Middle East seems at the least certain to usher in a new period of tensions, and could ultimately threaten Iran’s efforts to rejoin the global economy.
“Our officials are in a rush to sign contracts with big oil companies in order to have leverage when Trump enters the White House,” said Saeed Laylaz, an economist with close ties to the government of Rouhani. The Iranian president came to power promising to end Iran’s isolation and revive its economy, so the advent of a Trump presidency poses a dire threat to his political future.
Analysts noted that the deals were only memorandums of understanding, not hard contracts. But they stressed that the agreements also indicated a strong desire by Western and Asian energy companies to send a message to Washington as they return to Iran, once the world’s second-largest exporter of oil.
Rouhani and his government of technocrats are fighting their oil battle on two fronts. Domestically, they face pressure from hard-liners who have been closely scrutinizing the oil contracts, seeking anything that could undermine Iran’s independence and trying to steer them to companies under their control.
But Iran’s oil minister, Bijan Namdar Zangeneh, told the semiofficial news agency Fars in November that only foreign companies had the ability and capital to modernize Iran’s crumbling oil and gas sector.
“We need technology, including the management technology that allows a project to come into operation in four years rather than in 12 years,” he said. “And above all, we need the money.”
Iran also faces a struggle to rebuild its oil exports. Growing production has allowed Iran in recent months to recover many of the Asian and European markets that it lost to Saudi Arabia and other OPEC producers during the years when sanctions were in effect. And as Iran effectively flexes its muscles in OPEC for the first time since the sanctions were lifted in January, its goal is not only to protect its newfound gains but also to expand its markets, pitting it directly against its bitter sectarian rival, Saudi Arabia.
Further production and export expansion, however, will require more foreign investment.
The new wave of agreements with Iran, most of which remain provisional, began Nov. 8, the day of Trump’s victory, when Total, a French company, became the first Western energy company to negotiate a deal to develop and produce natural gas from a section of a giant Persian Gulf gas field. Total leads a consortium that includes the China National Petroleum Corp. and Petropars, a subsidiary of the Iranian state-run oil company, in the $4.8 billion project.
“They are signing before Trump does something,” said Dragan Vuckovic, president of Mediterranean International, a Texas-based oil services company that works in North Africa and the Middle East.
Iran needs foreign capital and technical expertise to reach its immediate goal of returning to its 2011 oil production level of 4.3 million barrels a day, reversing a drop that began even before sanctions were imposed. Many Iranian fields are old and in decline, requiring sophisticated and expensive redrilling of wells and injections of water and carbon dioxide to coax more oil from the ground.