Azernews.Az

By Farhad Daneshvar

Expectations that Washington could re-introduce sanctions against Iran have cast shadow over the Middle Eastern nation’s efforts to renew its aged oil industry through the Iran Petroleum Contract (IPC).

While a May 12 deadline, on which US President Donald Trump must sign a presidential waiver on sanctions on the Islamic Republic, looms, fears have gripped the supporters of the 2015 nuclear deal that the unpredictable president may keep the signing pen in his pocket.

Tehran has cherished hopes that the new Iranian calendar year (started March 20) will see holding long-awaited tenders on developing its joint fields in western Iran.

Following the implementation of the Joint Comprehensive Plan of Action (JCPOA, aka nuclear deal) in January 2016, the Islamic Republic, freed from crippling sanctions, sought to develop its oil and gas fields.

Tehran, immediately after removing the country’s oil sanctions, introduced the Iran Petroleum Contract (IPC) in a move to replace the old buyback model.

National Iranian Oil Company (NIOC) later said it launched serious talks with potential foreign suitors in order to hold tenders to hand out the development projects.

The country’s shared fields with Iraq, including the West Karoun region, which has five major fields of North Azadegan, South Azadegan, North Yaran, South Yaran and Yadavaran, were among the prioritized projects to be developed in the framework of the new IPC tenders.

Iranian oil ministry plans to boost the output of the region to 700,000 barrels per day (bpd) by March 2019.

However, the oil ministry has seemed slow in implementing the IPC model due to two main reasons - investors’ fear over the fate of nuclear deal and domestic opposition by hardliners.

After July 2017 agreement with the French major Total, the NIOC signed its second IPC deal with a consortium led by Russian Zarubezhneft this March to develop Aban and Paydar-e Gharb oil fields in the west of the country, both jointly owned by Iraq.

The output of Aban and Paydar-e Gharb is currently 36,000 barrels per day, which according to the 10-year deal is projected to hit 48,000 bpd.

The latest reports by Iranian sources suggest that the country’s output from West Karoun increased by 89.4 percent over the last fiscal year, which ended on March 20. The total output of Iran from West Karoun stood at 305,000 bpd over the last year.

The in-situ deposit of West Karoun is estimated to be about 67 billion barrels, containing both light and heavy crude oil.

The country needs to lure $25 billion in foreign investment to bring the final output of the region to 1.2 bpd once the fields become fully operational.

Now, President Trump’s vocal hostility to the nuclear deal has contributed to a drying up of westerners’ interest in the economic partnership with Iran.

For instance, Austria’s Oberbank, which was among the first European banks to ink an agreement with Iran in the post-sanctions era, has recently said that the US administration is seriously throwing obstacles in way of trade with the Islamic Republic.

In a similar move back in February, Patrick Pouyanne, the head of Total, in an interview with the Financial Times signaled the giant’s possible exit from the deal if Trump decides to kill the nuclear agreement.

Total signed its deal with Tehran last July to develop Phase 11 of Iran’s South Pars field with an initial investment of $1 billion in the first major western energy contract in the country since sanctions were lifted.

Pouyanne said Total was fully committed to the South Pars project, but had several ways to exit if sanctions were re-imposed.

President Trump’s decision on appointing hawks to two top positions in the past month, Mike Pompeo for secretary of state and John Bolton for national security adviser, has even worsened the things further.

Europe and Iran have reportedly been engaged in talks to settle the issues and protect the nuclear deal, but John Bolton and Mike Pompeo appear against the nuclear pact.

"Trump can and should free America from this execrable deal at the earliest opportunity," said Bolton last August.

Although many still remain hopeful that Tehran would manage to hold tenders for concluding more IPC deals in the new Iranian calendar year, it will definitely act as a nail in the coffin of IPC if President Trump ticks the nuclear deal off.

---

Follow us on Twitter @AzerNewsAz