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  • Zanganeh: I will not withhold my consultation from President-Elect Raisi

To return Iran to the oil market

Zanganeh: I will not withhold my consultation from President-Elect Raisi

Iranian Minister of Petroleum Bijan Zangeneh stated that he would not withhold his consultation from the upcoming administration of Ebrahim Raisi for Iran's return to the world crude oil markets.

Between the 181st meetings of the Organization of the Petroleum Exporting Countries (OPEC) and the 18th OPEC Plus (which did not take place on Thursday evening as it was originally scheduled), there was an opportunity to ask a few brief questions in the office of Iranian Minister of Petroleum Bijan Zangeneh about OPEC issues and Iran's return to the oil market.

It was well past 9:30 pm on Thursday (July 1). His desk was busy; he asked us to ask our questions. We started with the issue of OPEC and ended with the possible candidates for the Ministry of Petroleum.

"I think the current situation in the country is extremely difficult," Zanganeh said, adding that he would not hesitate to help the government of Ebrahim Raisi. “Any administration that takes office will face extremely difficult conditions. Contrary to some who think that they can solve problems with quick work and solutions, I think there is no quick fix and the situation is very difficult. We must all help minimize the pressure on the people."

Mr. Zanganeh, considering that the 181st OPEC meeting was your last attendance in the organization, tell us about the best and worst memories of your 16 years at OPEC.

Zanganeh: We had a lot of difficulties during my time in OPEC, I don't know why?! But there were times when the oil market was in turmoil and we had to come to an agreement, an agreement that was very difficult; Iran's return to the oil market in 2015-2016 was very difficult after the lifting of sanctions; we had a very challenging meeting in Algeria and then a more difficult meeting in Vienna. Iran was able to return to its previous quota after the Vienna summit. The good memories in OPEC were also about the time when we reached an agreement and saw the result as the situation improved.

(The Minister of Petroleum referred to holding of an extraordinary meeting of OPEC (initially consultative) on September 28, 2016 in Algeria, where OPEC members, after long negotiations which took more than four hours), decided to reduce production by 700,000 barrels per day. The figure rose to 1.2 million barrels per day at the 171st OPEC meeting on November 30, 2016. During the same meeting, Iran was allowed to ramp up its output by an average of 90,000 barrels per day from the October 2016 baseline within a six-month period. According to the Minister of Petroleum, Iran's real production at that time was 3,900,000 barrels per day, with secondary sources reporting 3,707,000 barrels per day; Iran was also allowed by this decision to produce 3.975 mbd and even in the first quarter of 2017 could bring its production to over 4 mbd.)

You see, when a person attends a meeting with a heavy burden of the demands of a nation of 80 to 85 million, he has a difficult task ahead of him. He thinks about how he should put this burden on the ground with the right decisions. After all, the eyes of a nation are pursuing it, both formally and informally, and the rise and fall of oil prices is very important. A $2 rise and fall in oil prices means that $2 billion in foreign exchange earnings will increase or decrease.

Given such circumstances, how should a person make decisions? When a person goes to a meeting, he either has to make a decision or bring the talks to a dead-end. Creating an impasse in a meeting can also be a strategy for a short period of time, not for the long term, because others do not sit idle in this situation.

Why did you accept this position, even though you did not want to accept the post of Minister of Petroleum?

I became a minister to fulfill a great dream, and that was to be able to increase the country's oil and gas production so that the resources from it would be spent on development and investment in the country, they did not allow this to happen and I wished for my country to gain the first economic, technical and technological ranking in the region as stated in the vision document, which I did not reach.

I wanted to have a country where others would envy us. I spent my whole life to achieve this goal and I did my best to achieve it, myself and my colleagues, most of whom were worthy, smart, capable and talented people, but unfortunately at some point we could not move forward, I regret it, which of course is useless.

But I'm sorry that this was not what we deserved in terms of global position and regions, and we should have been far ahead of this. I once said that for 42 years, some people inside and some enemies abroad have not allowed Iran's oil production to reach even 4 mbd, while we can easily produce 6 mbd. The revenue of this amount of production would go to the budget, and the oil need not be exported in crude form, but could be used in downstream industries to create a huge income for the country. With the increase in oil production, this amount of nearly 30 billion barrels of oil would be added by 2040, which means that $2,000 billion of new income will be created for the country, which can change the face of poverty, misery, unemployment and lack of growth. It can enter the country into a new era, increase GDP and per capita income, and have people’s hands in their own pockets and live with dignity.

You have been in charge in this country for over 42 years, how much do you assess your contribution to Iran's failure to achieve the ideals you spoke about?

I consider myself responsible in all cases, this is not to say that I was not. For my part, I am responsible and I do not say in any way that I was not responsible.

What is your advice to your successor? If they face the challenges and problems that you had in this tenure...

If I want to answer your question about OPEC and the global market, I have to say that I will present all my experiences and views to the future administration with reasoning. I will even send the report of the recent OPEC meeting and my impression of this meeting to Mr. Raisi for him to be informed. I will honestly convey my views to any person who becomes a minister or any team appointed by Mr. Raisi; the decision is up to them. I believe that returning to the market and gaining a share is not a difficult task, of course, there will be a lot of pressure on the Ministry of Petroleum and the Minister, but it is not that it is intolerable and intransient. Of course, I wanted Iran to return to the oil market to happen in my time, because I knew which way to go to succeed, but anyone who comes to the Ministry of Petroleum and asks for help, I will be at their service and I will tell them the details and issues so that they will act in such a way that it will be both beneficial to the Islamic Republic and does not harm the market.

Will you advise the future minister to change the price of energy carriers?

No.

Are you saying that you think the social costs of changing the price is higher than the subsidy that is being paid?

I do not want to say this, but until the political and social context is prepared, whatever done in this field is not worth it because of the high social costs. In fact, any change in pricing requires a good space and a lot of groundwork must be done for it, which takes several years. I do not think anyone will be able to enter the price debate within the next several years.

You said at the beginning of the 11th administration that you did not sleep from stress on the nights when we had to pay the targeted subsidies to people’s accounts; now, given that the livelihood subsidy has been added, this problem still exists?

The mechanism for paying subsidies to the administration has changed, and the Budget and Planning Organization and the Central Bank were supposed to take all the oil money and told us to give it directly to them, so we no longer need to provide subsidy sources from the Ministry of Petroleum.

We transfer the revenue directly to their account and it is no longer related to us whether the amount is a little or too much and we will be comfortable.

Given the concern about the return of Iranian oil to the market, will this return shock the market and cause a sharp drop in oil prices?

No, I do not think anything will happen. OPEC is wise enough, and OPEC+ also cooperates with OPEC, and they are also wise people, and they will surely understand and digest Iran's return well.

You said that the most important international priority of the petroleum minister of the 13th administration should be to return Iran's share to the market. What should be the most important priority in the domestic sector?

They must be very careful about meeting the needs of the people in the fuel sector (gasoline and diesel) and gas supply in the winter, whether for this year or the next year. This is a very important issue. In the oil sector, we have implemented many plans so far that ensure resumption of our pre-sanctions production levels a very short time after the sanctions are eased. Those plans must be pursued.

Did you suggest any candidate for the Ministry of Petroleum to Mr. Raisi, the President-elect?

No, it was not and is not supposed to be like this. I have no duty either. He himself will decide with awareness and wisdom; I am at their service whenever they ask me for advice, but I do not make any suggestions for any appointment, it is not common and it is not the right thing to do.

Various candidates are named from time to time, from Mr. Mirkazemi to Mr. Nozari. Which one do you think is better?


I do not know; that will be whoever they say; of course I will say if they ask for my opinion. It was like that before and I didn't say anything. Of course, the difference between this period and the previous one is that in that period, my plan was not to cooperate with them, because I did not believe in them from the beginning, but I will not withhold any consultation from Mr. Raisi and his administration if they ask for help. I have officially announced that I will give any advice they want, but I will not get a post, a mandate, a car, an office or a salary. I am at their service for free whatever they want, if they want they may use it, they may also choose not to.

I do these things for the sake of Iran. Because I think the situation in the country is extremely difficult now. Any administration that take office will face extremely difficult conditions. Contrary to some who think that they can solve problems with quick measures and solutions, I think there is no quick fix and the situation is very difficult. We all need to help keep the pressure on people to a minimum.

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