Iran Welcomes Shell, BP, Total and American Oil Companies

Iran Welcomes Shell, BP, Total and American Oil Companies

Dr. Majid Rafizadeh Become a fan: President of the International American Council: 14 June 2015

“Royal Dutch Shell PLC, which owes the Islamic Republic an outstanding debt of more than $2 billion, has been talking about repaying Iran after the nuclear deal is signed, and consequently the related sanctions are lifted.”

In an unprecedented move, Iranian leaders have welcomed American oil companies to enter Iran, upon the condition that sanctions are lifted. This move suggests that the Islamic Republic is putting its economic interests ahead of its revolutionary ideological interests. In return, the economic profits will definitely help Iran spread its revolutionary ideologies and principles in the region.

Recently, Iranian Oil Minister Bijan Zanganeh stated to Iran’s media “We welcome the presence of American oil companies in Iran,” adding, “we will definitely prepare the grounds for the presence of American oil companies in Iran.”

On the other hand, for the Islamic Republic, one of the advantages of the final nuclear deal between the six world powers (known as the P5+1; the United States, United Kingdom, France, Russia, China, plus Germany) and Tehran is the short-term and immediate benefits such as receiving billions of dollars which have been frozen due to economic sanctions.

Royal Dutch Shell PLC, which owes the Islamic Republic an outstanding debt of more than $2 billion, has been talking about repaying Iran after the nuclear deal is signed, and consequently the related sanctions are lifted.

In an unprecedented meeting, Zanganeh recently met with Shell’s Chief Executive Ben van Beurden. Beurden pointed put that he is giving “assurance that payments will be made [to the Islamic Republic] as soon as they can be made.” Moreover, Zanganeh met with other Western companies in a summit of the Organization of the Petroleum Exporting Countries.

Intriguingly, Zanganeh reciprocated Iran’s interest in working with super-major oil and gas companies offering “more attractive” contracts.

Several foreign companies were unable to pay Iran for its deliveries due to the financial and banking sanctions imposed by the United Nations Security Council as well as due to unilateral American economic sanctions imposed on the Islamic Republic due to its nuclear defiance.

The West’s Misconception

The issue of immediate access to billions of dollars is particularly appealing and crucial for the Iranian leaders due to the notion that Tehran looks at the final nuclear deal through the prism of a short-term, immediate economic and geopolitical boost.

There exists a misconception in the West that the nuclear deal with the Islamic Republic is going to be transformational and revolutionary. This follows that the West, and particularly the United States, contends that the final nuclear deal or the nuclear resolution is going to transform the character of the Iran’s political system in the long term; hence it will fundamentally alter Iran’s regional, domestic policies, shift its support for Shiite militia groups and proxies across the Middle East, moderate Iran’s foreign policy, and probably change the government in long term.

Nevertheless, from the Iranian leaders perspective, the nuclear deal is transitory, fleeting, momentary and transactional. In other words, Iranian authorities will follow the rules of the nuclear agreement for the limited time assigned in the deal, they will boost their economy, regain billions of dollars, and reinitiate their nuclear program soon after.

For Iran: A Nuclear Deal is A No-Brainer

As a result, from the perspective of Iranian leaders, and particularly the Supreme Leader, Ayatollah Ali Khamenei and influential officials of Iran’s Revolutionary Guard Corps (IRGC), reaching a final nuclear deal is a no-brainer, economically speaking. In addition, Iran will not give up its nuclear program.

It is crucial to point out that the flow of billions of dollars into the Islamic Republic will not trickle down to the Iranian citizens or even be distributed equally among the governmental institutions such as Iran’s foreign ministry. The overwhelming majority of the cash will likely be controlled by the IRGC, Quds forces (an elite revolutionary branch of IRGC fighting in foreign countries) and office of the Supreme Leader. The IRGC and office of the Supreme Leader do enjoy a monopoly over major economic sectors of the Islamic Republic.

As a result, the final nuclear deal is viewed as purely business for the IRGC and the Supreme Leader.

The IRGC’s high officials and the Supreme Leader will not only receive billions of dollars frozen in other countries and multinational corporations, but will also seek new avenues to increase exports of oil and economic deals with Western and multinational oil and gas companies.

Iran Tells OPEC: Be Ready for Iran’s Full Return

Western companies including Shell and BP have already shown interest to re-enter Iran’s oil market as soon as a final nuclear deal is reached and issues of economic and banking hurdles are resolved.

After several decades, this is the first time that Western super-major oil and gas corporations are openly and publicly expressing their interest to access Iran which enjoys the world’s second-largest natural-gas and fourth-biggest oil reserves.

Iranian leaders will attempt to use the short term nuclear deal as a platform to seal long term oil contracts, which will institutionalize the profits for many years to come. This will make it more difficult for sanctions to snap back in case Iran defied the terms of nuclear deal. Iran’s oil ministry is looking for roughly $200 billion investment in order to revive and rehabilitate its oil industry. Iran has been publicizing and circulating its oil and business contracts. As Zanganeh stated, the new contracts are “long-term, with better situations, rather than the previous framework that we have.”

In closing, unprecedentedly, both Western oil and gas companies and Iran hardliners are openly expressing interest in cooperating with each other, as Iran will gain legitimacy from the final nuclear deal.

This suggests two crucial issues. First of all, OPEC members ought to be prepared and chart ways for Iran’s full return to the oil market. As an Iranian delegate pointed out “Iran is telling other OPEC members to get ready for its return”. Iran is planning to boost exports by one million barrels a day after sanction are lifted. Currently, Iran’s oil production is roughly 2.7 million barrels a day and it oil exports is approximately 1 million barrels a day. Secondly, the international community. and particularly the US, needs to have a strategy pre-planned for Iran’s economic return, which will boost Tehran’s geopolitics and the IRGC’s influence in the region. So far, the Obama administration does not appear to have any particular strategy to rein Iran’s economic return.

Majid Rafizadeh, a Harvard-educated American scholar and political scientist, is the president of the International American Council on the Middle East. He is originally from Iran and Syria.

This post first appeared on Al Arabiya.