Bilateral Conference on Cooperation in the Iranian Energy Sector

Freiberg Teheran.JPG
State Secretary Freiberg at the Conference. Photo: Norwegian Embassy in Tehran

State Secretary Kjell-Børge Freiberg from the Norwegian Ministry of Petroleum and Energy visited Tehran for the bilateral “I.R. Iran – Norway Technology Partnership Workshops” between 28th of February and 1st of March.

Chargé d’Affaires at the Norwegian Embassy in Tehran, Dr. John Mikal Kvistad, was the first main speaker at the conference organized by the National Iranian Oil Company (NIOC) and Norwegian Energy Partners (NORWEP). He highlighted mutual business interests of Norwegian and Iranian companies and spoke about how historic ties between the two countries can facilitate cooperation in the energy sector despite certain obvious obstacles concerning weak business transparency, low production rate, pollution etc. The top priority for the Iranian government needs to be to get the wheels moving in the oil industry. As of now, the main obstacle to that is that the NIOC has not signed a single binding contract for field development and that there are only limited banking services available to foreign investors.

In front of representatives from more than 30 Norwegian companies and their Iranian counterparts, State Secretary Freiberg then emphasized Norwegian experience and state-of-the-art technology in the oil and gas sectors. This makes Norway a beneficial partner for Iran struggling with its low recovery rates and large environmental footprints from oil and gas projects. Norwegian business representatives later picked up the more technical points and shared their insights on how they have incorporated local content in their projects to the benefit of local communities.

Deputy Head of NIOC for Development and Engineering Affairs, Gholamreza Manouchehri, emphasized how Iran’s vast oil and gas resources can be profitable for Norwegian companies, provided they accept gradual transfer of technology and knowledge to local counterparts in their projects.

Opportunities and challenges in the Iranian market
Iran has the world’s largest combined oil and gas resources, but the sector is underdeveloped and plagued by outdated technology causing low recovery rates, pollution and frequent facility-shutdowns. Although Iran offers vast opportunities to Norwegian companies given the demand for modern technology and knowledge, investments remains modest. This is due to chronic delays in the launch of the new contract model IPC, high perceived political risk and heavy bureaucracy. The Norwegian Guarantee Institute for Export Credits (GIEK) and Export Credit Norway accompanied the delegation and held meetings with NIOC to familiarize themselves with how to do business in Iran and support Norwegian exports to the country. “We need to learn more about each other, know more about doing business with Iran and get familiar with Iran’s banking system.”, chief executive of GIEK, Wenche Nistad, told the Iranian daily Financial Tribune on the sidelines of the meeting.

Without binding contracts for field development and the launch of the new IPC, it will be difficult to increase bilateral trade in oil and gas. Petroleum-related trade makes up only a modest proportion of the current trade between the two oil and gas nations. The development is also lagging behind the overall increases in Norwegian exports to Iran, which have increased five-fold since the easing of sanctions.

On a positive note, cooperation between Norway and Iran in maritime business and renewables looks promising. State Secretary Freiberg met with CEO’s Cyrus Kianersi from the National Iranian Tanker Company (NITC) and Seyyed Mohammad Sadeghzadeh from the Iranian agency for renewables (SUNA) on the sidelines of the conference. Kianersi reiterated his wish to expand trade with Norwegian companies, which could get important roles in NITC’s ambitious program of fleet-expansion, including several LNG-tankers. There are also good prospects of expanding ties between Norwegian companies and SUNA, where the latter offers a fair and predictable framework for Norwegian investments in renewables.