Baku, Azerbaijan, Aug. 28
By Farhad Daneshvar – Trend:
While the US sanctions have cast shadow over Iran’s plans to lure foreign investment to renew its aged oil and gas industry, Chris Cook has shared his views on Tehran’s capabilities to bring in foreign funds.
Addressing a parliamentary session on August 20, President Hassan Rouhani said that luring $100 billion in foreign investment to develop Iran’s oil industry is among the oil minister's main tasks for his second term.
"There is bad news and good news," says Cook, a strategic market consultant, who also formerly headed the International Petroleum Exchange.
"The bad news is that the Trump administration is intent on making Iranian access to dollars – whether dollar payments or dollar investment via equity funding or debt financing – to all intents and purposes impossible, notwithstanding anything in the JCPOA. This means that $100 billion in foreign investment to which you refer is most definitely not feasible in any reasonable time horizon," Cook said responding to Trend query regarding the Islamic Republic’s capability to draw foreign investment to renew the country’s oil and gas industry.
"The good news is that it is completely possible for trillions of dollars worth of investment to be made in Iran and in neighboring countries without using dollars at all. This is because accounting/pricing – or keeping score – of transactions in dollars is very different from using the dollar clearing system to repay dollar debts or repatriate dollar profits on investment," he added.
Iranian Oil Minister Bijan Namdar Zanganeh has in recent years been engaged in updating the long-standing Energy Diplomacy, developed during the former President Mohammad Khatami’s administration, Cook reminded, adding that this "smart energy policy" instrument consisted of energy swaps, such as the Caspian oil swap (flows of Caspian crude oil into northern Iran, exchanged for flows of crude oil delivered out of the Persian Gulf).
"In addition to reactivation of these and similar swaps, perhaps the most remarkable – and most important – Energy Diplomacy was the recently contracted South Pars 11 investment by Total, through which 20 years’ investment of technology, skills and experience will be swapped for a flow of condensate. The outcome is firstly a 'smart swap' of intellectual value for the value of carbon fuels, and secondly, through the participation of Chinese investors the deal provides 20 years’ security of condensate demand for Iran and 20 years’ security of condensate supply for China," Cook suggested.
"The point is that such smart swaps will – within a suitable networked market platform or ‘energy clearing union’ – enable many hundred billion dollars worth of intellectual and other resources required by Iran to be swapped for many hundred billion dollars worth of carbon fuels supplied by Iran. Since such swaps do not take place on the oil market platform dominated by the US, they do not require settlement in dollars through the US dollar clearing system from which Iran is effectively excluded."
"Iran currently faces President Trump’s America First doctrine and an emerging US strategy of Energy Dominance aimed at excluding Iran both from the energy market and the dollar system. My colleagues and I do not believe that EU First and China First alternatives are attractive to Iran, and we look forward to working with Minister Zanganeh to develop Energy Diplomacy through a new doctrine of Energy First," Cook said.