23 May 2019
A Malta-flagged Iranian crude oil supertanker is anchored off Singapore in this 2012 file photo. Photo: Reuters
A Malta-flagged Iranian crude oil supertanker is anchored off Singapore in this 2012 file photo. Photo: Reuters

Iran boosts oil output as foreign firms jockey for deals

Foreign firms are scrambling for deals with Iran as the Gulf nation ordered a sharp increase in oil output to take immediate advantage of the lifting of international sanctions.

Other companies, however, were more wary, mindful of the risk of falling foul of an array of US penalties that remain in place despite the lifting of nuclear-related sanctions on Saturday by the United States, European Union and United Nations, Reuters said.

The landmark deal between Tehran and world powers restores Iran’s access to tens of billions of dollars in frozen assets, reopens the country to foreign investment and allows it to resume selling oil on world markets, albeit at a time when they are drowning in excess supply.

Deputy Oil Minister Rokneddin Javadi said Iran could increase output by 500,000 barrels per day (bpd) “and the order to increase production was issued today”.

The sanctions revoked at the weekend had cut Iran’s oil exports by about 2 million bpd since their pre-sanctions 2011 peak, to little more than 1 million bpd.

Oil prices touched their lowest since 2003 on Monday as an already oversupplied market braced for additional Iranian exports.

The lifting of sanctions opens up business opportunities across a host of sectors, from planes to telecoms.

“Iran is a huge market and in our focus,” Kaan Terzioglu, head of Turkey’s biggest mobile operator, Turkcell, told Reuters in an interview.

He said Iran could be a target market as the company looks for regional acquisitions: “We are closely watching the Iranian market and in touch with all of its fixed line and mobile operators.”

Dennis Nally, global chairman of PricewaterhouseCoopers, told the news agency before the start of this week’s World Economic Forum in Davos that the audit and consultancy firm was seeing strong client interest in opportunities in Iran.

“Without question the energy, energy-related and infrastructure industries stand to benefit, but also sectors like retail, with the potential creation of a new middle class,” Nally said.

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