EU, Iran's importance together
By Dalga Khatinoglu
The EU foreign policy chief Federica Mogherini's trip to Iran on July 28 can pave the way for boosting economic relations.
Iran and P5+1, headed by Mogherini achieved a nuclear deal on July 14 and the Western sanctions on Iran are expected to be lifted in four to six months.
According to the Joint Comprehensive Plan of Action (JCPOA), the sanctions in oil, gas, and petrochemical sectors eliminated are:
- Import and transport of Iranian oil, petroleum products, gas and petrochemical products
- Export of key equipment or technology for the oil, gas and petrochemical sectors
- Investment in the oil, gas and petrochemical sectors
- Investment, including participation in joint ventures, goods, services, information, technology and technical expertise and support for Iran's oil, gas and petrochemical sectors
- Purchase, acquisition, sale, transportation or marketing of petroleum, petrochemical products and natural gas from Iran
- Underwriting services, insurance, or reinsurance
- Efforts to reduce Iran's crude oil sales
- Export, sale or provision of refined petroleum products and petrochemical products to Iran
- Transactions with Iran's energy sector
- Transactions with Iran's shipping and shipbuilding sectors and port operators
Iran has announced that $185 billion investment is needed in upstream oil and gas sector, as well as $70 billion in petrochemical and $200 billion in optimizing energy consumer sectors to halve the energy intensity, which is two times more than global averages.
European Union has put about $250 billion direct investment abroad in 2014, while the total amount of global foreign direct investment was about $1,600 billion.
On the other hand, the EU was importing 680,000 barrels per day of crude oil, condensate and other liquid fuels from Iran before sanctions and can resume that after removal on sanctions step-by-step.
On the other hand, EU has lost its place in Iran's trade turnover during last decade significantly and can resume in coming years.
According to Iranian Customs, Europe had about 50 percent share in Iran's imports in 2005, as well as some 15 percent of Iran's total non-oil exports, however, Iran-EU trade has been almost halved during the last 10 years.
On the other hand, Iran's other financial and industrial sectors like insurance, auto market, cunstruction sector, etc needs European investors and companies.
Dalga Khatinoglu is an expert on Iran's energy sector, head of Trend Agency's Iran news service
Follow him on @dalgakhatinoglu
Edited by CN