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Tehran's Power Lobby

How Energy Concerns Drive the Nuclear Deal

Gas flares from an oil production platform at the Soroush oil fields with an Iranian flag in the foreground in the Persian Gulf, 1,250 km (776 miles) south of the capital Tehran, July 25, 2005. Raheb Homavandi / Reuters

Since its announcement in early April 2015, the interim agreement on the Iranian nuclear program has yielded some $7 billion in sanctions relief for Iran, even though core U.S. and EU sanctions blocking Iranian imports remain in place. Although U.S. President Barack Obama faces tough opposition on the deal from Congress, his EU partners are eager to get back into Iran’s market of nearly 77 million people.

To that end, top-level Iranian decision makers, including the minster for business and industries, Mohammad Reza Nematzadeh, will meet next month to discuss future business opportunities for European investors at a conference organized by the Austrian Federal Economic Chamber. Germany, one of Iran’s oldest trading partners and an exporter of nearly $3.86 billion to Iran in goods and services in 2012, may well reach over $11 billion in exports per year if and when the sanctions are lifted.

Iran’s untapped energy reserves represent some of the most attractive opportunities, both for the leadership in Tehran and European businesses. With gross natural gas production of almost 8.2 trillion cubic feet per year, Iran is the world’s third-largest producer after Russia and the United States. Despite its vast resources, Iran only accounted for one percent of global gas trade in 2012. Its domestic gas market, too, remains underdeveloped as a result of sanctions, representing only five percent of the estimated $231 million per day in global crude oil revenues.

Russian conflict with Ukraine has thrown Europe’s energy supply into disarray, endangering the steady flow of oil that flows through Ukrainian pipelines. The fall in global oil prices has thrown the Iranian federal budget into disarray, opening a window of opportunity for negotiation: Iran is likely to use oil and gas contracts as incentives to resolve its nuclear dispute with the West, while persuading countries to be more flexible with negotiations for the sake of their national oil industries. Russian conflict with Ukraine has thrown Europe’s energy supply into disarray, endangering the steady flow of oil that flows

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