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Norway Waiting for Iran Sanctions Relief

Source: www.gulfoilandgas.com 12/22/2013, Location: Asia

Norway has amassed big wealth mainly due to its huge oil and gas discoveries since the late 1960s. However, Norway does not owe its technology and wealth exclusively to its rich hydrocarbon reserves.

Its management of these reserves mainly over the past two decades has largely affected economic and industrial indicators of the country. Norway used to depend on foreign companies for exploration and development of oil and gas reserves, but now it owns state-of-the-art technology which serves different spots in the world. Iran greatly values Norwayís petroleum industry because of its self-acquired technology and years of cooperation in the past. Norwayís Statoil was among foreign companies which pulled out of Iranís projects due to international sanctions targeting the Islamic Republicís energy sector. But the recently-sealed nuclear deal between Iran and world powers Ė thanks to the administration of President Hassan Rouhani Ė is expected to attract foreign oil companies back into Iran.

In order to get familiar with Norwayís future energy cooperation with Iran under the new circumstances, Iran Petroleum has conducted an interview with Norwegian Ambassador to Tehran Jens-Petter Kjemprud.

Q: As the first question, could you please tell us your assessment of the influence of Iranís nuclear deal with P5+1 on Tehran-Oslo relations?

A: The P 5+1 nuclear deal is a historic breakthrough in Iranís relations with the international community in general and the US and Western countries in particular. It is an important basis for further normalizing relations and developing political, economic and cultural ties bilaterally and through multilateral arenas. Both parties (Iran and the P5+1) must now carefully consider why earlier attempts of reaching a permanent deal, like in 2003, did not succeed. Both parties must also deliver dutifully on the agreed measures to be taken in the 6 month interim period. Learning from past experiences and delivering on the intermediary deal will create the necessary trust and thus facilitate a permanent deal which in the end will provide Iran the opportunity to deal with the rest of the world free of any sanctions.

Q: How do you evaluate the current level of cooperation between Norway and Iran? How will this cooperation change, once sanctions against Iran are eased?

A: The current level of cooperation between Iran and Norway is seriously hampered by the multilateral as well as US and EU unilateral sanctions hitting third parties. Economic cooperation, trade, business relations and investment has ďdriedĒ up because of the sanctions, in particular since the imposition of heavier sanctions during the last 2-3 years. There is a huge untapped potential in Iranian-Norwegian cooperation and we know that Norwegian and Iranian companies are following the nuclear talks closely to be ready to tap the potential when sanctions relief allows.

Quite obviously, if you look at Iranian-Norwegian [relations], especially in oil sector before the latest sanctions were imposed; there was a quite comprehensive cooperation in the oil sector. Oil companies [like] Statoil had quite an important role in the South Pars [gas] field and in a few other fields, as well. So although Statoil has not decided to come back, they are obviously following the situation.

Q: Iranís new administration is widely expected to broaden its ties with the West and Western oil companies, including Franceís Total and Royal Dutch Shell, showed interest in Iranís energy sector, but we did not hear anything from Statoil. Why?

A: If I knew I would not be able to reveal business secrets. But I feel quite certain and I presume that they both are looking into what is happening now in Geneva, in the new agreement and after they are doing whatever they think is right to be able to take advantage of the possibilities which will be open if you have a final agreement. The temporary agreement for the sanctions allows certain development and then you go into new negotiations and then for the eventually lifting of all sanctions.

Q: What are the potentials for the expansion of cooperation of the two countries? In case sanctions are fully lifted in the coming months, which sector will Norway prefer to cooperate with Iran in?

A: There is a wide range of areas of cooperation which would be of mutual benefit. This includes of course the petroleum sector including the supply services, but also a number of other sectors like in particular specialized fertilizers, quality and certification services to name a few. Other areas could be identified.

I think definitely the petroleum sector will be important. We have experience there from the past, [experience of] working in Iran. I think in addition to sanctions, also the revision of the framework [of the contracts] and the agreements which are now revised could give further impetus to international oil companies coming back. Of course the petrochemical sector as such is also quite interesting. And if sanctions are lifted I guess they will also be very interested in the Iranian market. It will be in the interest of Iran not only as an oil producer but also a huge market. And so many countries have been active before but their operations have been restricted by the sanctions. So the fact that Iranís a big market, itís good for Iran and good for other countries to have common mutual benefits which I think should serve as an encouragement for both parties to finalize a deal. So these mutual benefits for having a deal I think is an important push factor for reaching a deal. If you see some of the sanctions [are] lifted now for example for the airline, civil aviation, car industry, itís not only a good deal for Iran but also for other countries cooperating with Iranian companies in these businesses. So I think the future benefit issue is quite important.

Q: Given Iranís massive hydrocarbon recourses, what role can Iran play in the global energy scene, especially in Europe?

A: On the global energy scene Iran, with its abundant reserves in oil and gas, is among the most important players even today under sanctions. If the continuation of the nuclear talks succeeds Iran could increasingly expand its stature and role. As for Europe both oil and gas supplies could beneficial. As Norway is one of the biggest gas suppliers to the European market today, future coordination and cooperation between the two countries would be beneficial. Norway is an observer member of the GECF and participated in the recent ministerial meeting in Tehran. Through this organization, now under a very capable Iranian chair, I forecast desirable horizons for future cooperation.

Q: Norwayís Statoil has already operated development projects in Iran. Are Statoil and other Norwegian companies willing to return to Iranís oil and gas projects?

A: Statoil and Hydro have now merged their petroleum activities under the Statoil umbrella. As you know Statoil had very good experiences in Iran, especially through their role in the South Pars field but are currently not active in Iran due to the sanctions. Given the current developments, most oil companies are following closely the developments in Iran and I presume this includes Statoil and possibly other Norwegian companies.

Q: Norway has in the past trained Iranian experts. Do you think that these training programs will continue in the short, medium or long term?

A: Transfer of knowledge and technology has been severely hit by sanctions. There is a solid basis for resuming cooperation in this field. There are also many Iranian experts working in the Norwegian oil industry, today. Therefore, when the situation allows we should carefully look into future cooperation in this field.

Q: What task has been assigned to the Norwegian Embassy in Tehran with regards to oil and gas cooperation between the two countries? Have you held talks with Iranian oil officials?

A: Our predominant role is to secure Norwegian interests in Iran and continuously look for opportunities of mutual interests and common benefits for the two countries. The oil and gas sector is probably the most important, but not the only sector the Embassy is trying to follow. However, the real experts work for the companies and our role is the facilitatorís role, if and when it is needed. I; however, hope to meet your new Minister soon to discuss the overall framework for the oil sector in Iran as a basis for facilitating possible future cooperation.

Q: Norway has progressed significantly in oil and gas technology and development projects. Do you have any plans to provide other countries including Iran with this technology?

A: As I said above, technology transfer is one important aspect of cooperation. Norway has through research and developing of the oil and gas sectors acquired technologies that give us some of the highest recovery rates in the international oil and gas environment. This includes also the ability to stop flaring of gas and utilize the resources efficiently. Research and investment is required, and I believe this is where Iran could benefit substantially in the future.

Q: Given Iranian oil industryís potentials for investment and Petroleum Minister Bijan Namdar Zangenehís policy of reviewing oil contracts in order to make them more attractive, are your government and Norwegian oil companies willing to invest in Iranís projects?

A: We are following closely the revision of policies and contracts announced by the Minister and believe that such a development could further increase the interest of multinational oil companies in Iran as the possibilities for investment will reemerge on the back of the Geneva talks.

Q: You mentioned you are waiting to see how Iranís Petroleum Ministry will define the terms of new oil contracts. Statoil and Hydro have already struck buy-back contracts with Iran. What points do you think should be taken into consideration in the new contracts to attract Norwegian companies?

A: Well although I am a lawyer by profession and I am not an expert in the contracts, I understand from talking to the Iranian [Petroleum] Ministry and the Norwegian companies that the current contracts are less attractive to foreign companies and now the ministry is looking into revising the contracts to be more attractive for investors. So that seems to be an incredibly important move to get the companies, when sanctions are lifted, into the countries as fast as possible.

Q: What do you think of future oil and gas cooperation between Iran and Norway?

A: I am an eternal optimist and what is happening just now with the interim deal and new round of negotiations, brings hope and expectations. Before coming to Iran I told a Norwegian newspaper that changes would come. Now I urge everyone to stay optimistic and constructive at the same time emphasizing the need to manage expectations in the short term. We should allow ourselves to be carried away a little by the breakthrough agreement, but also shoulder the responsibility to carry through the remaining issues of contention. The small steps will only alleviate and remove some impediments of cooperation and suspend some sanctions. There is need to rebuild trust and identify and solidify the convergence of common interests which I think must be the basis for a solid understanding for rebuilding solid relation. The convergence of interests is there, let us treasure and develop it for a lasting deal to be achieved.

Q: Given the present political circumstances about Iran, does the Norwegian government have any plans regarding broader ties with Iran?

A: I usually answer that by saying that before I came here, I was interviewed by a Norwegian newspaper on Iranian-Norwegian relations, and I said that I believe there would be changes in Iranís relations with the international community, during my duty there. Not because of me, but because circumstances was ripe. I predict that much will change, what we are seeing these days in Geneva accords and new negotiations coming up, it is changing the whole relationship with the international community.

Q: As the last question, how well does Iran Petroleum monthly help you get information about Iranís petroleum industry?

A: It is extremely important for us as a source to follow the developments, we get a few copies from you, some of which are sent to Norway and I hope you will continue sending us more copies because itís very useful for updating our information. We at the embassy are not expert in the oil sector. So itís important for us to keep Norwegian companies informed about developments. Iím really impressed by both the content and format of the magazine. Congratulations!

What I have suggested in the feedback was that at some stage maybe you could also have foreign experts on the Iranian oil sector and global or regional developments could give some other perspectives and also create a debate with domestic audience.

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