European Oil Companies Return to Iran, Hopeful of Sanctions Relief

Representatives from major European oil companies have been meeting officials in Iran in an attempt to strengthen relationships and put themselves in a position of favour ahead of the anticipated lifting of Western sanctions.

Back in November 2013 Iran managed to agree terms for a six month deal with the West in which they will earn a slight reprieve to the sanctions in exchange for scaling back their controversial nuclear program.

Tough sanctions will still remain in place until a full deal is made, but hopes are high and executives from European firms such as Total and Saras have recently visited Tehran in order to talk with officials from the National Iranian Oil Company (NIOC). Iran is confident that it will be able to secure a full suspension of sanctions and resume trade with Europe by the end of the year.

A senior Iranian oil official told Reuters that “everybody is preparing for serious negotiations with Iran, pending the removal of sanctions. We've already had lots of interest from our traditional customers in Europe.”

Paolo Scaroni, the Chief Executive of Eni, explained that “the best way for companies like us to go back to Iran is to follow strictly the sanctions and push both parties to reach an agreement which will lead to the lifting of sanctions one day.”

Related article: Iran's Patience May Pay Off in Oil Markets

Reuters reports that before the strict sanctions were imposed in 2012, Iran supplied more than 700,000 barrels a day to the European Union plus Turkey, nearly a third of its entire exports, and whilst the sanctions are not expected to be lifted in the short term, Tehran is already preparing the way for its return to Europe. As well as the recent talks with company executives, Iranian officials also plan to hold meetings with old customers in Istanbul and London in the next few weeks.

An industry sources commented that “I suspect it won't lead to anything real. They want to send optimistic signals and try to put prospective customers on the spot.”

Below is a table created by Reuters to show the volumes of crude oil imported by European companies, including Turkey, before the sanctions began to take effect in 2012.

By. James Burgess of Oilprice.com