Iran Transformed by Oil Discovery

A03786492.jpgTEHRAN (FNA)- They call it “Well Number One”. A sign proudly proclaims the spot where the first middle-eastern oil was discovered 100 years ago.

The oil derrick is still there – it produced oil for 70 years.

The town itself – Masjid Suleiman – in southwest Iran, is still an oil town. The countryside is criss-crossed with the pipelines that bring oil from each wellhead to the refinery or the export terminal.

But much else has changed.

For nearly 50 years the Iranian oil industry was controlled by the British Anglo-Persian Oil company.

You can still see the names of British companies on some of the older plant. But the British only paid $75,000 (£40,000) for the original 60-year concession – and a small share of the profits.

To this day, that is the source of enormous bitterness in Iran.

“No fair British person can be proud of that part of the history of the UK in Iran,” argues the Iranian National Oil Company’s Vice-President for investment, Ghanimi Fard.

“Unfortunately the overall presence of the British in those years in the Anglo-Persian and Anglo-Iranian oil companies was disastrous for Iran”, he says.

Back in those days, thousands of Western oil workers were based here.

Now the bungalows that used to house them have been taken over by Iranians. The Golf club, where the Westerners used to relax, has been turned into an army base.

In fact across the oilfields of southwest Iran you hardly see a foreigner any more.

Instead the emphasis is on self-sufficiency. At Azadegan, the Iranians have taken over development of a vast new oilfield, after the Japanese pulled out because of the United States’ political pressure.

Iran still provides nearly 5% of the world’s oil needs. It is strange then, that the US is striving to isolate an industry of such global importance.

The Americans have had sanctions in place since the 1979 Islamic revolution, and European companies have become increasingly reluctant to invest due to Washington’s growing pressures and threats.

We would be more than happy to supply part of Europe’s energy needs, provided that this would be a two-sided deal.

The Chinese, Indians and Russians are moving in.

State-run companies of Asian economies keen to secure future energy supplies are less susceptible to US pressure to stay out of the Islamic Republic and are taking a bigger role in its energy sector.

Following US pressures on companies to stop business with Tehran, many western companies decided to do a balancing act. They tried to maintain their presence in Iran, which is rich in oil and gas, but not getting into big deals that could endanger their interests in the US.

Yet, after oil giants in the West witnessed that their absence in big deals has provided Chinese, Indian and Russian companies with excellent opportunities to signing up to an increasing number of energy projects and earn billions of dollars, many western firms have now lost reluctance to invest or expand work in Iran.

It is not just the history of British involvement that makes the Iranians wary.

Iran argues that it does pretty well on its own – maintaining or increasing oil production, and working on petro-chemicals and gas.

Yet, Ghanimi-Fard believes that Iran still needs more international cooperation.

“We would like to have this interaction with the world,” he says.

“We would be more than happy to supply part of Europe’s energy needs – provided that this would be a two-sided deal. In some cases exchange of information, science, expertise can help this.

“Otherwise who is going to be hurting more? Very easily I can say that the standard of living in European countries, many western European countries, when they will not have enough energy, is going to be shattered in the long run,” Ghanimi-Fard added.

And despite having curtailed the multinationals, there are still doubts about how much Iran is benefiting from its oil wealth.

With high oil prices, Iran is now earning $7.5bn (£4bn) per month from the trade.

But, Bijan Khajehpour, of the company Atieh consulting, argues that so much oil money in the hands of the government changes its relation with society.

Instead of living on taxes, the government has the power to hand out money.

“You will find many Iranian elite members argue that oil for us historically has been a curse, because it has slowed down the overall economic development of the country, it has undermined social and political developments” he explains.

“Personally I am not so sure whether Iran without oil would have been different, Iran without oil would have had many other resources to look towards and develop”, he added.

For the West, oil gives Iran a strategic importance that makes it hard to contain. With oil prices over $100 (£53) a barrel, heavy sanctions on Iran – let alone military action – could endanger the global economy.

So that oil discovery in a sleepy corner of Iran continues to affect Iran and the world – in a way the British engineer directing the drill could never have dreamt of when he struck oil 100 years ago.

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