Books on Iran
Update No: 044 - (26/07/05)
Waiting for Ahmadinejad
Following the surprise victory of Ahmadinejad in the presidential elections,
there is much expectation for what cabinet he will choose and what his policy
options will be. Despite his claims that he wants to be the president of 70
million of Iranians and that he would use all skills and competencies available
in his government, there is widespread belief that he will appoint a cabinet of
rightists, including many personally close to him. Even conservative members of
parliament seem convinced of this. In any case, many reformists have already
announced that they would not be interested in joining the cabinet.
Ahmadinejad already made a number of statements with regard to his future
policies. He said that his domestic policies will be moderate and that he will
accept criticism.. The new chief of police appointed by Supreme Leader Khamenei
had echoed Ahmadinejad and has promised moderation especially in dealing with
the youth about breaches of the moral code. At the same time Ahmadinejad's
statements concerning freedom and human rights were a best ambiguous. The
reaction of the Teheran stock exchange was also negative and prompted
accusations from Ahmadinejad's team that "certain investors" were
undermining market confidence.
Worries at the Oil Ministry
Ahmadinejad also said that he will favour domestic firms in the oil sector.
He however accused his defeated presidential rival Rafsanjani of having been in
control of the oil ministry and promised to clean up the industry. Within the
oil ministry there are fears that a purge will soon start and that experts will
be replaced by unskilled cronies of the new president.
Among oil companies reactions were mixed, but predominantly rather negative. BP,
for example, declared that it will maintain its long-term interests in Iran,
while Sasol, on the other hand, is reconsidering its plans to develop
gas-to-liquids plants in Iran and will probably wait to see how US-Iranian
relations develop. In general, his statement in favour of domestic companies and
of a clean up within the oil ministry were not welcome and contributed to push
oil prices slightly higher.
In July the government announced that production of oil has started in three new
fields (Darkhovein, Soroush, Nouruz), for a total of 190,000 bpd. This should
bring total capacity back over 4 million bpd, although some experts are
sceptical about the figures. In any case internal demand is rising fast. The
latest figures about energy consumption show that it is rising even faster than
forecast, adding to the problems caused by lack of investment over the last
several years. The government had to revise projections for the current year
from 31,000 to 32,000 megawatts. There was good news concerning the prospects of
the gas industry in July, as Poland started talks about building a pipeline from
Iran. Europe is a key target for Iran in the medium and long term. Although the
Russians are trying to convince Europeans that they cannot trust Middle Eastern
supply sources, a number of countries which entirely depend on Russia for their
supplies are keen to diversify their supplies.
Nuclear deal as uncertain as ever
It is too early to say how the issue of Iran's nuclear program is going to
be affected by the new presidency. Britain and Germany have already made clear
that Ahmadinejad's radical past will not affect the nuclear talks. In fact,
these two countries and France are rumoured to be preparing to offer Teheran
cooperation with its civilian nuclear program, in exchange for the renunciation
to produce nuclear fuel. The Khatami government had already expressed its
intention to maintain at least a small uranium enrichment program and it is
unlikely that Ahmadinejad will change this.
Iran in any case, is moving swiftly to woo the new Iraqi government, dominated
by Shiite religious parties. Iran is now hailing Iraq as "its brother"
and is getting involved in the training of the Iraqi army, a development which
will not please the Bush administration and has already forced the Iraqi defence
ministry to rectify and downplay the issue. Iran, which is itself in need of
additional refining capacity, will also allow Iraq to use its Abadan refinery to
process crude oil. A number of other projects of economic cooperation are being
discussed including a project for joint carmaking factories.
BP intends to stay put in Iran
In a recent interview with Iran Daily, Britain's Ambassador at Tehran, Richard
Dalton said that British Petroleum (BP) is interested in long-term investments
in Iran. In fact, the British companies British Gas and shell are involved in
Iran's oil, gas and petrochemical projects, he said. Dalton added that BP has
also joined hands with Iranian companies for producing engine oil and it is one
of the main oil importers of Iran. It has been reported that the volume of
bilateral trade between BP and Iran has been increasing over the past few years.
Currently the volume of direct trade stands at annual 700m Euro. The bulk of
Britain's exports to Iran take place indirectly via Dubai. BP is also
extensively involved in Iran's chemical and commercial schemes. BP officials
have said the company is currently pursuing businesses in Iran in the area of
lubricants, chemicals and trading and insisted it will continue its presence in
Iran through its main representative office.
BP also intends to consider business in the hydrocarbon sector in Iran.
A wave of chaos triggered when the Chairman of BP's board of directors, John
Brown, said in 2004 that due to sanctions imposed by the US and to avoid any
punishment, the company decided not to operate in Iran and would instead prefer
Iraq for its activities in oil fields.
Commenting on this issue, that time Iranian Oil Minister, Bijan Namdar-Zanganeh
responded by saying that the company has no share in Iran's projects. He said,
"We have offered no projects to BP and remarks by the company's management
to the effect that they will not invest in Iran are only a green light to the
United States." However, BP has withdrawn its stance.
Dushanbe and Tehran ready to expand energy cooperation
Iran is willing to cooperate and develop close relations with Tajikistan,
Iranian President, Mohammad Khatami, announced recently, after Khatami received
a letter from his Tajik counterpart Imomali Rakhmanov, Interfax News Agency
Khatami said both countires have adopted important steps that would lead to
progress and development along with regional stability and security. This was
possible due to the policy of mutual respect followed by both Iran and
Tajikistan, non-intervention in each other's affairs and expansion of
multilateral and bilateral cooperation.
He praised the policies of Rakhmanov in establishing democracy adding that both
countries have launched fruitful cooperation in different economic, commercial
and energy fields, including construction of Anzab tunnel and the Sang-Tudeh
Tajikistan has also expressed an interest to promote ties with Iran. Khatami's
visit to Tajikistan and Rakhmonov's Iran visit are turning points in promoting
bilateral ties that called for further cooperation in construction of power
plant for energy generation. On June 11, Iran's Energy Minister, Habibollah
Bitaraf and his Tajik counterpart, Jurabeck Nurmahmadov signed a memorandum of
understanding (MoU) on the second Sangtudeh dam and hydroelectric power plant to
be constructed in Tajikistan.
According to the terms of the document which was drawn up in 19 articles, Iran
will construct the dam and power plant in Nurek district, west of Tajikistan.
The ministry of energy will undertake preliminary measures required to establish
an enterprise to be called Sangtudeh II Co, which is to be registered as an
Iranian joint stock company. The dam and power station, which is to be
constructed over Vakhsh River will require 220m Euro in total.
Iran will offer 180m Euro under a 10-year loan with a 5% interest rate. Besides,
a credit of 40m Euro will be extended to Sangtudeh II Co by Tajikistan.
Under the MoU, Sangtudeh II Co will be committed to establish the dam and power
station by using the financial facilities to be extended by Iran's export
development bank and the credits to be provided by Tajik ministry of energy,
which will get the proprietorship of the dam and power station. This will be
possible upon implementation of the project and once the banking facilities and
the relevant expenses and turnover of the company are paid back to Iran.