Will nuclear deal change Iran to 'Germany of Mideast'?

Will nuclear deal change Iran to 'Germany of Mideast'?
Mon Nov 25, 2013 22:12:18

The historic six-month agreement over Tehran's nuclear program may begin a new era of relations with Iran, but it will be a long road back for the country's most vital sector, oil, CNN editorial said on Monday.

Iran produces about two and half million barrels a day -- far off its 4-million-barrel-per-day peak a decade ago, the article added.

The message is clear: the pressure remains, but if all goes well, in a half year's time Iran can expect more in return for transparency.

Iran sits on about 9% of the world's proven oil reserves, claiming a few years back that it has nearly 150 billion barrels and the world's largest gas field. But its top four customers --China, India, Japan and South Korea -- have all had to cut back their energy imports by a third or more in the past few years due to U.S. and European pressure.

With every year that has passed, the screws have been tightened by Washington and the countries of the European Union. It was not only sanctions against oil, but also blocking Iran's ability to secure shipping insurance and to trade in U.S. dollars and euros.

Oil executives with experience in the country say this initial agreement would help lift a cloud of uncertainty over the oil market, but that President Hassan Rouhani and his cabinet have to establish much better contract terms if this honeymoon period lifts sanctions.

The blunt-speaking Chief Executive of French energy group Total, Christophe de Margerie, said at an energy conference in Abu Dhabi this month that Iran needs to try and create a better climate for investment if this weekend's breakthrough is sustained.

Oil giant Saudi Arabia has expressed doubts about signing a deal with Tehran, which will introduce more challenges within OPEC. Iraq plans to double production by 2020 to six million barrels a day and with Iran wanting to rebuild exports, the Kingdom may have trim its own production to defend prices.

It is still early days, but this country of nearly 80 million people has been described as potentially being the Germany of the Middle East with plenty of natural resources -- that is, if it can emerge from years of economic isolation.


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