(Minews) - Senior executives from Glencore have met Iranian officials in Tehran ahead of a possible deal on its nuclear program, in the first sign that commodity trading houses are positioning to help the OPEC member return to the international oil market.
Glencore’s visit follows discussions between European oil majors Shell and Eni and Tehran over long-term investments in the country’s oil and gas industry if Western sanctions are lifted. But big oil traders may have a more immediate role to play.
Alex Beard, Glencore’s head of oil, flew with a small team to Tehran this week to meet the Iranian oil ministry and the Iranian National Oil Company, sources familiar with the discussions said.
“Exploratory talks took place around potential business opportunities subject to the removal of the relevant sanctions,” said a spokesman for Glencore.
Iran is estimated to be storing up to 40m barrels of crude oil and other products on vessels floating off its coast that could be sold almost as soon as sanctions on the country’s oil exports are lifted.
It will also be looking to regain customers after Western sanctions limited the countries it could sell crude oil to in recent years.
Iranian and Western negotiators have moved closer towards a deal over Tehran’s nuclear program at meetings in Vienna this week, even as a deadline for talks had to be extended.
Iran’s oil exports have been curbed by sanctions since 2012, falling to about 1m barrels a day.
Iran is the third-largest oil producer in the OPEC cartel, pumping about 2.8m b/d. Analysts predict it could add another 600,000 b/d of production within a year, helping to maintain the current oversupply in world markets. It is finalizing a contract system to secure about $100bn of new oil and gas deals with Western companies if sanctions are lifted.
Jamie Webster, senior director at IHS Energy, said Iran was “not going to sit on the sidelines” waiting for the results of talks in Vienna, but was preparing to move the moment sanctions were lifted.
“Iran will explore all the strategies that are available to it to help it regain its share of the oil market and find new buyers for its crude,” said Mr Webster.
“Traders can certainly help you develop relationships with refiners and other buyers around the world.”
US oil majors, which have had no presence in Iran since the 1979 Islamic revolution, would also be able to bid for Iranian oil contracts if a nuclear deal between Iran and six world powers were agreed.
International oil prices have fallen from above the $100 level they averaged in the first four years of this decade to about $63 a barrel Thursday.
While Glencore has increasingly positioned itself as a mining company since going public in 2011 and its takeover of Xstrata two years later, it remains a leading oil trader with a long history in the market.
In the period of upheaval after the Arab oil crisis of 1973-74, Glencore’s founder Marc Rich established the foundations of the modern oil trading industry, breaking the status quo of inelastic long-term sales from OPEC countries to oil majors such as BP and ExxonMobil.
Glencore has built on that tradition during the past four decades to become the world’s second-largest independent oil trader. It traded 3m barrels per day of crude and refined oil products last year, enough to cover single-handedly the combined oil imports of Germany and Italy.
Glencore has continued to sell a small amount of agricultural commodities to Iran in recent years that are not subject to sanctions.
