BREAKING NEWS

BREAKING NEWS

Iran's oil minister says OPEC at risk of becoming 'trivial' in oil market

OPEC's decision to maintain its oil output levels served Saudi Arabia's strategic interests but hurt lesser producers such as Iran, causing tensions within the oil cartel

Now Reading:

Iran's oil minister says OPEC at risk of becoming 'trivial' in oil market

Text size Aa Aa

OPEC’s recent decision to maintain its output level, led to a dramatic fall in oil prices. The decision reflected Saudi Arabia’s desire to maintain its position in the global market. But it will have an impact on Iran whose economy relies heavily on oil and which has been hit hard by international sanctions. Euronews’ Reihaneh Mazaheri spoke to the Iranian Oil Minister, Bijan Namdar-Zanganeh, about these and other key issues..

Point of view

It will be good and beneficial if they (OPEC members) can continue this cooperation but, if not, there will be nothing left of OPEC

RM
OPEC has just held its most important meeting in six years. Despite Iran’s efforts, you didn’t get the result you were hoping for. Why didn’t the main oil producers in OPEC, including Saudi Arabia, share Iran’s view?

BNZ
Of course, we were advocating a production cut. We did not propose a figure because such a figure would be determined by analyses and the assessments that were there in the market. Following consultations that took place, it apparently turned out that we needed a bit of time to see how much of these expensive oils are eliminated from the production circle. In order to get to a definite decision, we need to have more information about the reaction of the market to the new prices, as you know that all decisions in OPEC should be based on consensus.

RM
You talk about consensus. But what we see is that, similar to the past OPEC meetings, this recent meeting has also ended with Saudi Arabia getting what it wanted. As the country produces one-third of OPEC’s oil, can we say that Saudi Arabia always has the last word in OPEC?

BNZ
In outward appearance OPEC is like a cooperative in that every party, regardless of its output and capacity, can have one vote. However, the truth of the matter is that the level of production, the capacity for production and the power to produce extra, has a determining role in the market and this is something we need to learn from.

Let me say something general. OPEC is an organization for cooperation amongst competitors. It is the only organization in which the third world countries have gathered together for 50 years where they have been able to see their long-term interests and cooperate for common interests despite all their internal disagreements. It will be good and beneficial if they can continue this cooperation but, if not, there will be nothing left of OPEC.

Each country in OPEC has its own national interests. Saudi Arabia is one of the main oil producers and exporters. The country exports nine million barrels of oil and its by-products every day. It knows that if the oil price falls by 30 dollars (per barrel), it will lose around 110 billion dollars each year. Behind this decision, they must have had important interests in terms of national security to have made such a loss worth its while.

RM
What do you think these interests are for Saudi Arabia?

BNZ
As an oil minister I cannot say, l but politicians have produced many analyses on this. I do not know how much of this analysis is right and how much is wrong. However, there are numerous analyses in the market and in the media that follow political discussions.

RM
To what extent has Iran’s small share of the OPEC oil basket led to its lack of influence in the organization’s decision-making process?

BNZ I have just put it clearly (in previous answer). Of course, the weight of each country in OPEC is determined by its production level and its capacity to produce extra.

RM
With regarding to the internal disagreements within OPEC, and considering the current flux in the oil market, can we foresee a day when OPEC loses its control over the global oil markets?

BNZ
One of the important and historical concerns of OPEC has been about its share in the market. In recent years OPEC’s share in the market has steadily decreased. If this continues and it goes beyond a certain limit, then OPEC’s impact would become trivial.

RM
On the sidelines of the recent OPEC meeting, you also had talks with the bosses of oil companies like Total and BP. These companies had roles in Iran’s oil industry in the past but now, because of the sanctions, they don’t. What was discussed in the meetings? Are you looking for ways to open the door to foreign investors even though the sanctions are still in place?

BNZ
We are certainly looking for this and we want these international oil companies to participate in our oil industry as of now. It is not just for the investment and the money. We need the technology and the quality management more than money in order to develop Iran’s oil, gas and petrochemical industry.

RM
Minister, you talk very optimistically about the lifting of sanctions. But, in the most positive scenario, even if it’s decided to lift some of the sanctions you know that it will realistically takes some time and it may not even happen during the current administration’s term in office.

BNZ I am not as pessimistic as you are.

RM But judging from what we have seen in the nuclear talks, it’s clear there has always been some obstacle to reaching a deal…

BNZ
Of course, in our view, the most important sanction is the oil sanction. If any sanction is to be lifted, it should be the oil sanction. And if the sanction on oil is not lifted, that would mean that no sanction has been lifted.

RM
How much have the sanctions cost Iran?

BNZ
It is certainly costly but we will announce the amount later. It has its costs but not as much as some people may think.

RM
My last question is about the joint gas field between Iran and Qatar. You have previously said that within three years, Iran would produce an equal amount to Qatarr. How much of its share in the joint field has Iran lost out on?

BNZ Yes, we will catch up with Qatar in terms of quantity and we may even go beyond. We need a constant flow of gas. Qatar has produced an extra amount that we may be able to compensate for in the course of time. It is also possible that this may not happen. But what is important is to correct the present and make up for the past if we can. If we cannot do so, then we should not stay in the past and lament over it.