EU

Iran forum offers Europe’s companies post-sanctions opening

Executives from some of Europe’s biggest companies are aiming to consolidate their links with Iran as the Islamic Republic prepares to rejoin the global economy.
Some 500 representative from companies including Alstom SA, RWE AG, the Tehran Stock Exchange and the National Iranian Oil Co. will meet in Geneva on Thursday and Friday to discuss everything from trade finance to business diplomacy at the second Europe-Iran Forum.
The event is the first major investment conference to take place since Iran reached a deal with international powers in July to ease economic sanctions in exchange for curbs on its nuclear program. While Switzerland became the first country to lift trading restrictions on Iran last month, companies are still bound by U.S. and European Union bans for now.
Europe is “in pole position” once sanctions are lifted, conference founder Esfandyar Batmanghelidj said in an interview. “The political relationships are there and the business leaders from Europe know their counterparts in Iran.”
In 2014, the the inaugural conference in London aimed at bringing trade with Iran to the global stage. Now the focus is on implementation, Batmanghelidj said.
Historic Deal
Iran could export an extra half a million barrels a day within a week of international trade restrictions being lifted, the country’s Oil Minister Bijan Namdar Zanganeh said in August, and big oil and gas producers such as Eni SpA, Royal Dutch Shell Plc and Total SA have been exploring ways to take advantage of a breakthrough with the energy-rich state.
Still, the biggest prize may be access to Iran’s 80-million population, said Batmanghelidj.
“The story of Iran opening is often told in terms of the huge oil reserves and infrastructure potential,” he said. But the greater opportunities may come from “taking advantage of its end user and making that market a place where products and services are delivered at street level.”
European countries and government officials have already started reaching out to Iran. Austrian President Heinz Fischer became the first head of state to visit the country in more than 10 years, while Arnaud Breuillac, Total’s president of exploration and production, held talks with the NIOC in Tehran on Sunday.
Iran aims to lower inflation to single digits by 2017 from 15 percent in June and spur economic expansion as the accord rolls back global sanctions, Iran’s central bank has said. Speaking in an interview last month, Vice-President Mohammad Bagher Nobakht said he expects economic growth to reach as much as 5 percent in 2016, up from an expected 3 percent this year.
Back in Switzerland, traders at Vitol Group, Glencore Plc and Trafigura Beheer BV, some of the world’s oil-trading champions, are also anxiously awaiting the lifting of sanctions imposed by the U.S. and the EU that prohibit dealing in Iranian oil.
As Iran and world powers neared a deal this summer, Glencore executives and Iranian officials held “exploratory talks” regarding “potential business opportunities subject to the removal of sanctions,” the trading company said in a July statement.
The trading houses largely stopped dealing in Iranian oil and refined products in 2012 and 2013 after the U.S. and Europe introduced their most recent sanctions. Previously, Vitol, Trafigura and Glencore were regularly among the top-five suppliers of gasoline to Iran, industry estimates show.
Glencore has kept up its relationship with Iran through its commodities trading business, since agriculture and food products weren’t subject to sanctions.

This article was written by   and for bloomberg on Spet. 23, 2015.