Iran needs to focus on developing its refining and petrochemical sectors, so that it eventually does not have to export crude and expose itself to international sanctions, according to the country's former oil minister Rostam Ghasemi, who is now running for president.
"In my expertise and experience in the area of oil, my priority is processing crude oil into oil products," Ghasemi told S&P Global Platts in an exclusive interview. "This must happen, because it guarantees our national security in the global oil market, even under sanctions. Under any conditions, it's possible to sell oil products. Secondly, it brings added value and can create jobs."
The 57-year-old Ghasemi, who celebrated his birthday on May 5, served as Iran's oil minister from 2011 to 2013 after retiring from the Iranian Revolutionary Guard Corps.
Ghasemi, who is now senior economic adviser to the IRGC commander and remains involved in oil sales, has declared his candidacy for the June 18 presidential election.
Whoever succeeds incumbent Hassan Rouhani will lead the country through new relations with historic rivals the US, as well as neighboring Saudi Arabia.
Rouhani's administration is currently engaged in indirect talks with the US, with the aim of restoring the nuclear deal and lifting sanctions that have severely hampered Iran's crude exports, a significant source of revenue.
Ghasemi hails from a conservative camp far from the moderate Rouhani but acknowledges that successful negotiations would help bring much-needed investment into the country's oil industry.
He was oil minister when the US imposed severe nuclear sanctions targeting Iranian crude exports and restricting its access to dollars, prompting international oil companies to withdraw.
The nuclear deal, known by the acronym JCPOA, lifted those measures in 2016, but the window of opportunity to bring in Western partners closed when then-US President Donald Trump pulled the US from the deal in 2018 and reimposed the sanctions.
"It is true that we face restrictions of investment in the era of sanctions," Ghasemi said. "We have this experience in the past years that we only invested $50 billion in 2011, 2012 and later on. The sanctions naturally limit investment in our country."
Iran pumped 2.30 million b/d of crude in March, according to the latest Platts survey of OPEC production, and it will be eager to regain its pre-sanctions output level of about 3.9 million b/d if a deal with the US can be agreed.
Ghasemi, who estimated Iran's current domestic consumption level at around 1.8 million b/d, spoke to Platts about the JCPOA negotiations, his plans for the oil industry and the country's OPEC relations. The transcript below has been lightly edited for clarity.
Sanctions talks
PLATTS: What are your top investment priorities in oil and gas?
GHASEMI: Our top priority is the shared fields [with Iraq] and their development. When I was oil minister it was on the agenda, too. The second priority is construction of a refinery [complex] that covers expansion of both the oil refinery and petrochemical sectors. Since we are a country with the advantage of a petrochemical sector, we should prioritize the downstream sector. The added-value chain in the petrochemical sector can profoundly develop the country and result in prosperity in other parts of the economy like job creation.
In the short-run, because building a refinery takes time, we should export. Except for [Israel], we basically have sold oil to any country that has been a customer of our oil. We don't consider any restriction for selling our oil in the market. [In gas,] our top priority is to sell gas to neighboring countries, and we don't see any barrier for gas exports to Europe. But there should be a bilateral agreement.
PLATTS: Do you support the JCPOA? Do you agree with it?
GHASEMI: For now, it's an agreement made internationally between P5+1 [the US, UK, France, Russia, China and German] and Iran. It doesn't matter if I support it or not.
PLATTS: How can the JCPOA negotiations be resolved successfully?
GHASEMI: The Americans quit the JCPOA without Iran having done any violation. I believe it's them who should return to the JCPOA without any condition. The first step should be this.
OPEC market share
PLATTS: If the sanctions are lifted, how long would it take for Iran to reach its previous level of production?
GHASEMI: This capability exists in the oil industry and they can quickly return to that.
PLATTS: Is it months, weeks, days?
GHASEMI: The oil ministry people who have the information can say this precisely. But they might not have the precise figure either.
PLATTS: Would this be an issue for OPEC, as it tries to rebalance the market through the pandemic?
GHASEMI: When there were no sanctions, we had no problem with selling our oil. We are not using our share within OPEC. Definitely, it will be discussed in OPEC. But we have not had problems in the previous [post-sanctions] era for selling oil and we will not have any later. We are an OPEC member, and naturally OPEC members will try to cooperate as much as necessary. And Iran, as one of the OPEC founders, is an influential member, and our OPEC cooperation will always continue.
Restoring investment
PLATTS: If the negotiations with the US fail, as president, how would you neutralize sanctions?
GHASEMI: I have said banking and oil sanctions must be lifted. This is mandatory, otherwise there will be no JCPOA and we will still be under the US sanctions. [But] our country's oil industry had the most developments under the heaviest sanctions. It showed that dependence can change to belief [in our] domestic capabilities. We are not a single-product country to only rely on oil. We can increase the country's income in various sectors including industry, mines, agriculture, petrochemicals, etc.
Neutralization means earning revenues, and the other notion is to lower our dependence on foreign resources. This means less demand for foreign currency and controlling fluctuations of foreign currency rate. Today, in the field of construction, Iranians have become so capable that they don't need foreigners. But in the field of investment, especially in the energy area, we need that. Countries and companies that are willing can make investments in Iran.
PLATTS: Even Americans?
GHASEMI: It depends on how the Americans deal with Iran and how they gain back the Iranian people's trust.