COPENHAGEN: European and U.S. oil-and-gas companies drawn to Iran as sanctions ebb can expect to encounter not only opportunities, but also capable Iranian companies offering tough competition or joint ventures.
While no Iranian companies have attained the prowess of integrated oil-and-gas firms such as Exxon Mobil Corp. or big service outfits like Schlumberger Ltd., a new breed has emerged during Iran’s years of economic isolation. They can take on engineering tasks such as laying pipelines, building offshore platforms and drilling wells that previously were handled by foreign companies.
If the nuclear agreement comes into effect and economic sanctions are lifted against Iran by the end of this year or early in 2016, those Iranian companies will be well positioned to compete for tens of billions of dollars in service contracts or to forge strategic relationships with Western companies, say industry officials. “One of the good byproducts of sanctions has been a rapid growth of our local capacity,” said Mehdi Hosseini, a top adviser to Iran’s oil ministry.
In some cases, the Iranian government will likely require foreign oil companies to work with these new local firms, possibly leading to joint ventures, said Robin Mills, head of consulting at Manaar Energy in Dubai. “When sanctions are lifted, then [local contractors] will definitely have a big role,” Mr. Mills said. Big oil and services companies haven’t yet publicly addressed how they will contend with local Iranian competitors. A spokeswoman for Schlumberger said it would start evaluating Iranian opportunities if and when sanctions are lifted. Exxon and other big energy companies didn’t respond to requests for comment.
Iranian officials have acknowledged that they need western energy companies to boost their local industry, which struggled to maintain production over the past decade. Increasing restrictions gradually pushed U.S. American firms out in the past decade and then European Union sanctions in 2010 caused a further exodus.
