Oil prices started the year at $60-per-barrel range, almost cut by half from $115-a-barrel high in June last year. The woeful run continued all the way through the yearend as Brent, the global crude benchmark, sank to $36 per barrel in December, a level last seen in 2004.
Iran’s energy sector had a relatively quiet stint during the first half of 2015, as the country started to feel the pinch of falling oil prices while patiently waiting for a much-coveted nuclear agreement to lift decades-old sanctions that had weighed heavily on the energy sector.
But the historic nuclear accord in July between Iran and six world powers (the five permanent members of the United Nations Security Council plus Germany) drastically changed the course of the year and set a second-half rebound with hope and enthusiasm.
The prospect of an end to financial and trade restrictions against Iran prompted many European and Asian countries to rekindle negotiations with and send delegations to Tehran to secure a place in the country’s promising post-sanctions energy market.
Financial Tribune takes a close look at the most important developments in the country’s energy sector over the past 12 months with a special focus on major international energy events.

Influx of Internationals
The nuclear agreement was quickly followed by the arrival of major international missions in the Iranian heartland, with several customers of Iranian crude stepping forward to settle oil debts.
In August, Iran and Italy held negotiations to restore ties in oil, gas and petrochemical sectors. Senior executives, including Eni CEO Claudio Descalzi, were among the hundreds of representatives who joined Italian Foreign Minister Paolo Gentiloni on their August visit to Tehran.
In September, Oil Minister Bijan Namdar Zanganeh and Spain’s Minister of Industry, Energy and Tourism Manuel Soria discussed liquefied natural gas supply to Spanish terminals, and from there, to other European destinations in a meeting in Tehran.
Zanganeh met Rainer Seele, CEO of Austrian oil and gas company OMV the same day, and explored the prospect of boosting extraction from Iran’s rich oil and gas fields using OMV technology and equipment.
South Korea’s electricity giant KEPCO and major automaker Hyundai announced plans to set up joint ventures in the fields of electricity generation, transmission and distribution in Iran.
A consortium of 250 Spanish companies visited Tehran in September and announced plans to invest in Iran’s petrochemical sector.
Zanganeh discussed oil export to Poland as well as underground gas storage and energy consumption efficiency techniques in a meeting with Janusz Piechocinski, the country’s deputy prime minister and economy minister.
Senior executives of the British oil and gas major BP also held closed-door talks with Iranian energy officials in September. The low-profile talks were followed by the first visit of a UK delegation to Tehran in over a decade to discuss grounds for economic and energy cooperation.
Later that month, energy companies Total and Engie, as part of a high-ranking delegation of French officials and business-owners from 150 companies, tested the waters for resuming business in Iran.
In October, Iranian officials explored areas of cooperation in the energy industry, particularly the renewables sector, in a meeting with a high-ranking delegation from the northwestern German state of Lower Saxony.
Meanwhile, Tehran strengthened energy ties with Moscow, its longtime economic partner, during back-to-back visits of Russia’s Energy Minister Alexander Novak to Tehran in October and November.
The two sides pledged to raise annual bilateral trade to $40 billion, with Russia signing a deal to build a 1,400-megawatt thermal power plant in the southern port city of Bandar Abbas.

Gas Deal With Baghdad
Tehran and Baghdad finalized a gas export contract in mid-November, based on which, Iran will supply 20-35 million cubic meters of gas per day to three power plants in the southern Iraqi city of Basra near the Iranian border. The volume will reach 45-60 mcm/d, once gas supply to Baghdad goes underway.
Gas supply to Basra was speculated to begin in 18 months, with export to the Iraqi capital expected by early 2016. The two sides extended the term of the contract from four to six years.
Officials have been tightlipped about the financial terms of the contract. The two sides signed a draft deal in 2013, which is estimated to be worth $4 billion to $6 billion. Gas supply to Iraq is estimated to total 40 billion cubic meters over six years.

Signaling the World
Nine heads of state from the Gas Exporting Countries Forum gathered in Tehran for the Third GECF Summit on Nov. 23 in a strong message that Tehran is ready to reach out to the international community and play a bigger role in the global natural gas market after the lifting of sanctions.
The summit was attended by Russian President Vladimir Putin who had last visited Tehran in 2007, Organization of Petroleum Exporting Countries’ Secretary-General Abdalla Salem el-Badri and his International Energy Forum counterpart Aldo Flores-Quiroga, among other prominent figures.
In his address at the Third GECF Summit, Iranian President Hassan Rouhani declared that the country’s gas production capacity will top 1 billion cubic meters per day in two years and will reach 1.2 billion cubic meters a day by 2020.
Zanganeh also said Iran and Russia ‘can establish long-lasting ties in the oil and gas sector in the post-sanctions period’.
Established in Tehran in 2001, GECF is an intergovernmental organization of 11 of the world’s leading natural gas producers, namely Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago, and Venezuela.

IPC Unveiling
After years of speculations and months of buildup, the Iranian government unveiled its long-anticipated contractual framework, known as Iran Petroleum Contract, to attract multibillion dollars in foreign direct investment after the sanctions removal.
The country unveiled 52 oil and natural gas projects worth an estimated $185 billion in the two-day conference that brought together more than 1,300 officials and representatives from 335 domestic and foreign companies in Tehran. The convention was held a week after the GECF summit.
IPC offers more flexible terms on oil price fluctuations and investment risks, and is seen as an improvement over the so-called buyback contracts that were in place for the past 20 years.
Zanganeh said that the IPC conference would be successful, if the new oil and gas projects attract $25 billion in foreign finance.
Oil and gas majors, including Total, Lukoil, Rosneft, Eni, Sinopec, Statoil, Petrobras, Royal Dutch Shell and BP, attended the two-day event in Tehran in the absence of American companies barred by the US administration from conducting business with the Persian Gulf country.
A second conference is scheduled to be held in London on February 22-24 for a thorough presentation of the multibillion-dollar oil and gas projects.

Petrochemical Gathering
Iran announced ambitions to attract $70 billion in petrochemical investment in a December conference in Tehran.
The 12th Iran Petrochemical Forum was attended by tens of high-profile international companies from Germany, Italy, Spain, Japan and China, among others.
Iranian officials underlined inexpensive energy prices, tax exemptions in energy zones and a 78-million-strong market as incentives for attracting multinationals to invest in the country’s petrochemical projects.
‘The IPF will boost relations between Iranian and foreign companies and the transfer of knowhow,’ Zanganeh said on the sidelines of the event.
Nominal production capacity currently stands at 60 million tons a year, but plans call for doubling the volume by 2021 and raising the output to an ambitious 180 million tons a year by 2025.
Iran sits on one of the world’s largest oil and natural gas reserves, holding 158 billion barrels of proven oil reserves and 34 trillion cubic meters of gas reserves.

A Summit of Disappointments
OPEC has been pumping at record rates, often exceeding its 30 million barrels a day production ceiling. The group’s last summit of the year on Dec. 4 was a last-ditch attempt to agree on cutting output to help lift prices.
But any such hopes faded as the meeting ended in acrimony with no mention of a new production ceiling in OPEC’s final statement. The last time OPEC failed to reach a deal was in 2011 when Saudi Arabia was pushing the group to increase output to avoid a price spike amid a Libyan uprising.
At present, Saudi Arabia, OPEC’s top exporter, is leading the pump-at-any-price bandwagon to drive high-cost producers such as US shale firms out of the market. But the self-damaging policy is also aimed at debilitating Iran and non-OPEC producer Russia who rely heavily on oil revenues.
Iranian officials have reiterated over the past few months the country will regain the market share it lost to rival producers such as Saudi Arabia and Iraq, and match its pre-sanctions output levels by raising production by 500,000 bpd within a week of the lifting of sanctions and by 1 million barrels within the following months.

US Export Ban
The United States lifted a 40-year ban on oil exports on Dec. 18, a major U-turn in the country’s energy policy that sent ripples through the markets.
However, American crude producers may not be willing to export oil if the price stays low. If a barrel is more expensive to produce than the market price, it is more likely that US oil companies will slow production and keep it on the domestic market.
The ban was first imposed in 1975 as the US was reeling from the 1973-74 Arab oil embargo, which dealt a heavy shock to the US economy and sent global prices shooting up.
OPEC’s Arab members had banned oil exports to the US in retaliation for Washington’s support of Israel during the Arab-Israeli war.