Iranian oil minister Bijan Zanganeh must be looking forward to retirement after 16 years in the hot seat. The country’s presidential elections are colliding with crunch time in the nuclear talks, determining whether and when Iranian oil returns to the world market. In the tradition of bullish pronouncements, Mr Zanganeh goes out with a few parting shots.
Last week's Opec+ meeting ended exceptionally quickly and smoothly, with an agreement to continue with plans to steadily ease production cuts. The group will add 2 million barrels per day by July, with 700,000 bpd of this coming this month. Ministers will have been encouraged by strong prices, with Brent crude trading at about $72 per barrel on Friday, the highest level in two years.
The market is set to be about 2 million bpd in deficit for the rest of this year, with swollen stocks from last year drawn down to almost normal levels. Opec forecasts a 6 million bpd gain in demand this year, mostly concentrated in the second half, even as rising Covid-19 infections in parts of Asia keep the picture cloudy.
Iran's return would quickly bring back between 1 million bpd to 1.5 million bpd of exports – as was the case after the first lifting of sanctions under Barack Obama, US president at the time – plus a temporary surge from drawing down the remainder of the country's excess stocks.
Opec+ will still have 5.8 million bpd of cuts in place after July. Accommodating the resurgence of Iran would slow the pace of normalisation, depending on demand and production elsewhere, but there seems to be enough space in the market. Iran, alongside troubled Venezuela and Libya, has been exempt from quotas. It is not expected to discuss joining the framework of production limits until it has had at least a few months to operate at full output.
So, what happens then? Mr Zanganeh told journalists last week that Iran could and should raise output to 6.5 million bpd, exceeding record levels reached in the 1970s. It would be emulating its neighbours – the UAE, Saudi Arabia and Iraq, which all have plans for production growth.
As with them, Iran may be increasingly mindful of the need to be ahead of a threatened decline in global oil demand highlighted in the International Energy Agency’s latest report.
Contracts were awarded last month to local companies for the further development of the new West Karoun fields on the Iraqi border amid plans to add about 200,000 bpd over the next couple of years. But gaining 2.5 million bpd or more beyond pre-sanctions levels while mitigating declines in the mature fields might cost in the order of $100 billion.
Iran has suffered a string of fires and explosions in recent months, several of which have affected the petroleum industry. They include a blaze at a refinery near Tehran last Wednesday that was sparked by a leaking pipeline, a blast that hit an oxygen pipeline serving petrochemical plants in the southern industrial centre of Assaluyeh the week before and a blaze last month at the Kangan refinery, which was inaugurated by President Rouhani a few months earlier.
While some of these, especially an explosion that damaged the Natanz uranium enrichment plant in April, are suspected to be acts of sabotage, others could be the result of hot weather, poor safety policies and the use of sub-standard parts because of sanctions. Whatever the cause, Iran needs both cash and international equipment.
One big mistake Iran made after the nuclear deal – called the Joint Comprehensive Plan of Agreement – came into effect in January 2016 was moving too slowly to attract foreign investment. It dawdled on drawing up its new “Iran Petroleum Contract”, which in the end was not that appealing to international oil companies, and laid out an over-ambitious scope of projects with too small a team of negotiators.
This was the fault of hardline parliamentary opponents of President Hassan Rouhani's government, institutional atrophy after eight years of the maverick Mahmoud Ahmadinejad and residual political and sanctions risk. In the end, Tehran signed numerous preliminary agreements but the most substantial deal – with Total and the China National Petroleum Corporation for the development of liquefied natural gas exports, after the deal was abandoned by Donald Trump, Mr Obama's successor, and sanctions were reimposed.
A string of major investments by European, Chinese, Japanese and Russian companies, and expanded gas exports to neighbours would have given their governments more incentive to resist Mr Trump’s torching of the nuclear deal. The window for Iran to use its hydrocarbon resources strategically closed then, and may soon close again, possibly forever.
Mr Rouhani's administration only has until early August to seal any revival of the nuclear deal with the US. With the election on June 18, Opec+ will know the next Iranian president by its next meeting on June 24, unless the election goes to a run-off the day after. The tiny slate of candidates who passed the vetting process includes two uninspiring moderates, four conservatives or hardliners and the hand-picked and probable winner, Ebrahim Raisi.
Mr Raisi, a hardline judiciary chief who lost to Mr Rouhani in 2017, could be declared the winner this time on a low turn-out. However, he will be problematic for western countries and Iran’s regional rivals to deal with. He or another hardliner may well return to the JCPOA and bring Iran’s oil back to the market but it will not be a friendly place for international investment.
Subsidiaries of supreme leader Ali Khamenei’s organisation were awarded two of the West Karoun contracts. Despite attempts to maintain the power of the clergy, he and an unpopular president will need the support of the Revolutionary Guard, whose engineering arm already plays a major role in the domestic oil industry.
The course of Iranian politics rarely runs smooth. Despite Mr Zanganeh’s long efforts, he is unlikely to see his country’s petroleum industry ever reach its potential.
Robin Mills is chief executive of Qamar Energy and author of The Myth of the Oil Crisis
Isle of Dogs
Director: Wes Anderson
Starring: Bryan Cranston, Liev Schreiber, Ed Norton, Greta Gerwig, Bill Murray, Jeff Goldblum, Scarlett Johansson
Three stars
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
The specs
Engine: 3.8-litre twin-turbo flat-six
Power: 650hp at 6,750rpm
Torque: 800Nm from 2,500-4,000rpm
Transmission: 8-speed dual-clutch auto
Fuel consumption: 11.12L/100km
Price: From Dh796,600
On sale: now
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
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Need to know
When: October 17 until November 10
Cost: Entry is free but some events require prior registration
Where: Various locations including National Theatre (Abu Dhabi), Abu Dhabi Cultural Center, Zayed University Promenade, Beach Rotana (Abu Dhabi), Vox Cinemas at Yas Mall, Sharjah Youth Center
What: The Korea Festival will feature art exhibitions, a B-boy dance show, a mini K-pop concert, traditional dance and music performances, food tastings, a beauty seminar, and more.
For more information: www.koreafestivaluae.com
Smart words at Make Smart Cool
Make Smart Cool is not your usual festival. Dubbed “edutainment” by organisers Najahi Events, Make Smart Cool aims to inspire its youthful target audience through a mix of interactive presentation by social media influencers and a concert finale featuring Example with DJ Wire. Here are some of the speakers sharing their inspiration and experiences on the night.
Prince Ea
With his social media videos accumulating more half a billion views, the American motivational speaker is hot on the college circuit in the US, with talks that focus on the many ways to generate passion and motivation when it comes to learning.
Khalid Al Ameri
The Emirati columnist and presenter is much loved by local youth, with writings and presentations about education, entrepreneurship and family balance. His lectures on career and personal development are sought after by the education and business sector.
Ben Ouattara
Born to an Ivorian father and German mother, the Dubai-based fitness instructor and motivational speaker is all about conquering fears and insecurities. His talk focuses on the need to gain emotional and physical fitness when facing life’s challenges. As well managing his film production company, Ouattara is one of the official ambassadors of Dubai Expo2020.
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
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The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
The five pillars of Islam
The Birkin bag is made by Hermès.
It is named after actress and singer Jane Birkin
Noone from Hermès will go on record to say how much a new Birkin costs, how long one would have to wait to get one, and how many bags are actually made each year.
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
