The Iran Project

OPEC veteran Zanganeh tapped to return as Iran oil minister

BloombergBruce Stanley: Iran’s President Hassan Rouhani proposed the reappointment of its longest-serving oil minister, Bijan Namdar Zanganeh, who fought to restore crude production and closed a landmark deal with Total SA to develop the Persian Gulf country’s share of the biggest natural gas field.

Rouhani submitted names of his cabinet nominees, including Zanganeh, for parliamentary approval, Tasnim news agency reported Wednesday. Zanganeh, a 65-year-old engineer who served two presidents as oil minister, succeeded in shielding Iran from joining global cuts in crude production by OPEC and other major suppliers. Parliament is set to vote on his reappointment starting next week, according to state media.

During the first of his two terms as oil minister, from 1997 until 2005, Zanganeh enticed foreign companies including Total and Royal Dutch Shell Plc to help revive Iran’s oil and gas fields after years of under-investment. He returned to the post in 2013 and boosted the nation’s oil exports as production rose by about 1 million barrels a day after the easing of economic sanctions in January 2016.

His latest efforts to woo investors bore fruit when Total signed a contract on July 3 to develop South Pars, Iran’s share of the world’s largest gas deposit, the first major investment by an international energy company since sanctions were scaled back.

‘No-Nonsense Approach’

“Zanganeh’s straightforward and no-nonsense approach was key in opening Iran’s petroleum sector to foreign investment in the late 1990s,” and he was a catalyst almost 20 years later for the milestone contract with Total, said Robin Mills, chief executive officer at Dubai-based consultant Qamar Energy. The Total agreement is “a big deal” that can “open the door for more companies to sign contracts with the country.”

When other members of the Organization of Petroleum Exporting Countries decided last November to pump less oil to reduce a global glut, Zanganeh wrangled permission for Iran to raise output by 90,000 barrels a day. He preserved the special arrangement when OPEC and allied producers extended their supply cuts through next March.

Zanganeh was born on June 22, 1952, in the western city of Kermanshah. He graduated with a bachelor’s degree in civil engineering from the University of Tehran, where he also earned a master’s degree with distinction in the same subject.

He first tenure as minister ended in 2005 when then-President Mahmoud Ahmadinejad dismissed him amid allegations of a “mafia” presence at the oil ministry. Zanganeh denied any wrongdoing and was appointed to the Expediency Council, an advisory body to Iran’s Supreme Leader, Ayatollah Ali Khamenei. He returned as oil minister in 2013 under Rouhani, Ahmadinejad’s successor.

Reviving Sales 

While Zanganeh has also worked to expand the petrochemicals industry, boosting oil output has been his paramount goal. “Revival of Iran’s lost oil markets is among my top priorities,” Zanganeh told the Fars News agency in August 2013, days after beginning his second tenure as minister.

Iran was OPEC’s second-biggest supplier at the time of Zanganeh’s dismissal. By the time he returned to the post, the nation had dropped to sixth-largest among the group’s members, its economy hobbled by sanctions. Iran’s oil production surged in 2016 before leveling off this year, according to data compiled by Bloomberg. By July, the country was pumping 3.75 million barrels a day, the data show, making Iran OPEC’s third-largest producer.

International monitors have asserted that Iran is meeting its commitments to scale back its nuclear program in return for sanctions relief. Zanganeh has outlasted the most punishing phase of sanctions so far and has helped devise new terms for an investor contract offering foreign partners incentives to explore for crude and gas.

However, residual sanctions, particularly those affecting payments, have deterred many potential energy investors. Opposition in the U.S. to the 2015 accord that eased curbs against Iran has hardened under President Donald Trump, clouding the outlook for investment in the Gulf nation. The U.S. last month imposed new restrictions over Iran’s ballistic missile program.

— With assistance by Hashem Kalantari, Nour Al Ali, Ladane Nasseri, and Golnar Motevalli

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