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Big Players Converge

Iran Oil Show 2016

Financial Tribune- Energy
May 7,2016

Big Players Converge

Big Players Converge

Iran Oil Show 2016, the country's first major oil, gas and petrochemical convention after the January lifting of sanctions, started on Thursday.
The annual exhibit has attracted around 900 international firms in Tehran for four days of showcasing, talking and cutting deals with 900 domestic companies.
Asian enterprises, particularly the Chinese, have showed up in large numbers compared to the last few years. But it is the participation of hundreds of European firms that turns head and raises hope of igniting stronger economic and energy relations with an Iran unshackled by western sanctions.
Some Europeans have been quick in rekindling ties, with the majority of westerners voicing strong interest in Iran's promising but precarious energy market.
------- OMV Eyes Expansive Ties
An official of Austrian oil and gas firm OMV told the Financial Tribune in Tehran that it is keen on expanding business in the Persian Gulf country, but some financial challenges are still in place nearly four months after the sanctions removal.
"There are still difficulties; the banking system is not yet up and running, because the primary sanctions have been lifted but secondary sanctions, particularly the US sanctions, are still in place. Otherwise, we don't find any difficulties coming here," said the official, who did not want to be named. He added that OMV is looking forward to sign petroleum contracts.
"What we expect are terms that are commercially sound and will allow a win-win situation for both IOCs (international oil companies) and NIOC." Earlier this week, OMV signed a memorandum of understanding with the NIOC to revive activities in Iran.
The Austrian major was compelled to scale back its operations from 2006 following the dispute over Iran's nuclear program that led to the introduction of tougher sanctions against the country.
"But we never closed our office here and maintained some local staff. Now that sanctions have been lifted and there is a new contractual commercial framework coming up, we are considering reinvestment."
------- East European Interest
Roman Smehlik, the head of the Export Department of Czech equipment manufacturer ABO Valve, said he is hoping his company will pick up where it left off in Iran's post-sanctions industry.
"We were previously active in Iran for five years, but unfortunately, our business came to a halt for some time due to sanctions," he said. "We are planning to restart business in Iran."
ABO Valve has already teamed up with an Iranian company to market its products and "refresh its previous contacts" in Iran, Smehlik added. The company was established in 1993 and has since become a major manufacturer of shut-off and control valves for industrial applications.
------- Brits Back for Business
ABA Stronalva Ltd., a UK-based procurement company, is keen to gain a stronger foothold in Iran's oil and gas market after decades of almost ceaseless operations.
"We are a supply company. We work with the procurement department in the oil and gas sector, supplying genuine, brand new spare parts for a lot of equipment," said Kevin Dargue, managing director of ABA Stronalva.
The company had a long track record in the Iranian market but sanctions forced it to halt business.
"We were active in Iran for about 40 years, but we were told [to leave] by the United Nations and, European Union and the American government. We had no choice."
The official added that ABA Stronalva had a lot of its orders by Iran canceled when the sanctions were imposed.
"We still have some orders sitting in our warehouse back in the UK which were ordered by Iranian oil companies. We will be reinvesting. We had an office with Iranian personnel working for us, but unfortunately we had to close. We are looking to reinvest and reopen our office," he said.
------- Swedes Seeking Investment
Camfil Power Systems AB, a Swedish producer of air filters and clean air solutions, is exploring new opportunities for cooperation and investment in Iran's resurging energy market.
Jan-Peter Nilsson, aftermarket and plant optimization director at Camfil, said the Swedish company is a major player in the clean air industry.
“Our business is to provide gas turbines and compressors with high efficient air filtration to raise the performance of their output and operation. Before the sanctions, we were active in the Iranian market for about five years,” he said, adding that sanctions forced out the Swedish firm.
Based in Stockholm, Camfil is a developer and manufacturer of clean air solutions with 26 manufacturing plants and 3,800 employees worldwide.
------- Belgium's Energy Consortium
Carbon Energy Club—a consortium of Belgian oil, gas and petrochemical companies—wants to revive Brussels' cordial relations with its "strategic commercial partner" in the Middle East, Mahyar Malek-Mohammadi, an Iranian representative of the consortium, told Financial Tribune.
"We were part of Iran's pre-sanctions refinery and petrochemical projects. Our subsidiaries were involved in design and overhaul," he said.
Carbon Energy Club is a consortium of Belgian oil, gas and petrochemical companies. The club's biggest contribution at the time of sanctions was in the overhaul sector.
"We hope to regain our lost market share in view of recent openings in monetary and trade relations with Iran," he said.
Although most sanctions against Tehran have been dropped, the business environment in Iran is still cloudy for many foreign firms, as they do not yet have a clear understanding of the business ambience in Iran.
However, Malek-Mohammadi said some age-old rules and regulations inside the country deter foreign trade and investment.
"You need financial support when carrying out projects in Iran and foreign companies that do business here need to be guaranteed of the return on their investment," he said. "For instance, a law that was passed 80 years ago regarding land ownership by foreign companies is still in place."
------- China Faithful
Chinese companies have a strong showing in this year's oil exhibition, with most Chinese firms concentrated in a large pavilion in Hall 38 of the fairground.
Kang Jian Hong, sales manager of Sichuan Huagong Petroleum Steel Pipe Co.—a manufacturer of drilling and exploration equipment—said he sees positive prospects for the future of Iran-China energy ties.
"Before and during the sanctions, we were always a provider of products for the Iranian market," he said. "Chinese companies have always supported Iranian petroleum industry. I believe there will be a progress [in bilateral relations], as Iranians have always been good friends."
The Chinese firm produces casing and tubing strings used to protect oil and gas wells against erosion.
Partnership with the Chinese has been somewhat of a mixed bag. After the exodus of Europeans from Iran due to sanctions, the country turned to Chinese contractors who were always there to help but occasionally proved unreliable in following through on their commitments.
The overall mood is one of foreigners seeking bonanzas in various Iranian sectors emerging from the cracks of western sanctions.


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