Iranian Oil Minister Gains Influence in OPEC

Iranian Oil Minister Gains Influence in OPEC ... 03/06/2016 News

Keywords:#Ahmadinejad, #Alfa, #Alfa_Energy, #Arabia, #Benoit_Faucon, #Bijan_Zanganeh, #China, #Columbia, #Columbia_University, #Crown_Prince, #French, #Iran, #Iranian, #Iraq, #Iraqi, #Islam, #Khatami, #Mahmoud_Ahmadinejad, #Middle_East, #Mohammad_Khatami, #Mohammed_bin_Salman, #OPEC, #Oil_Minister, #Organization_of_the_Petroleum_Exporting_Countries, #President, #Reuters, #Russia, #Saudi, #Saudi_Arabia, #Saudi_Aramco, #Sinopec, #Syria, #Tehran, #Vienna,, #Yemen

Bijan Zanganeh has broken up several attempts to reduce crude production
Iranian Oil Minister Bijan Zanganeh leaves an OPEC meeting in Vienna on Thursday. People who know him say Mr. Zanganeh has his sights set on reordering the balance of power among the world’s oil producers, especially with Saudi Arabia. Photo: Reuters

* * * By Benoit Faucon
VIENNA—When a handful of OPEC countries floated a proposal to reintroduce production limits on members on Wednesday, it took only a few hours for Iran to quash the idea with the words of one man: Bijan Zanganeh.
By Thursday morning, support for the limits had faded and the Organization of the Petroleum Exporting Countries took no action on production at its meeting.
Iran’s oil minister has taken on a more powerful role among the world’s biggest energy producers in recent months, as his country attempts an economic comeback with petroleum sales following the end of Western sanctions in January.
Mr. Zanganeh, 63 years old, has now broken up several attempts to reduce a flood of crude oil from both OPEC, which includes Iran, and nonmembers like Russia and the U.S. The glut pushed oil prices to new lows over the winter, but Iran sees production-cap proposals as an effort to rein in its resurgent oil sales. (See an interactive graphic exploring how the oil market has changed since OPEC abandoned its role as swing producer.)
In his second tour of duty as oil minister, according to people who know him, Mr. Zanganeh has his sights set on reordering the balance of power among the world’s biggest producers, especially with Saudi Arabia, Iran’s biggest rival and the de facto leader of OPEC, the 14-nation cartel that controls over a third of the world’s oil.
Mr. Zanganeh’s ascent comes as Saudi Arabia embarks on a high-profile plan to reduce its dependence on oil revenue. The kingdom replaced its longtime oil minister last month, Ali al-Naimi, and power over its petroleum industry appears to rest more with Deputy Crown Prince Mohammed bin Salman, second in line to the throne.
“Now Naimi is gone, [Zanganeh] is the most experienced” OPEC minister, said John Hall, chairman of U.K. consultancy Alfa Energy and a longtime observer of the cartel. Mr. Zanganeh “will push for maximum output. And the Saudis won’t compromise either,” Mr. Hall said.
Mr. Zanganeh declined several requests for an interview.
Iran and Saudi Arabia are using oil policy as a tool in the contest for influence in the Middle East. The two countries’ diplomatic ties are at historic lows as they back different sides in violent conflicts in Syria and Yemen and represent the national embodiment of different strains of Islam.
Tehran wants its production to reach pre-sanction levels of 4 million barrels a day or more, after falling below 2.7 million barrels a day while the U.S. and other Western nations restricted trade with Iran over its nuclear program. Iran is getting closer to the mark, Mr. Zanganeh told reporters Thursday, with output now at 3.8 million barrels a day.
As oil minister from 1997 to 2005, Mr. Zanganeh gained a reputation for brinkmanship, matching the Saudis barrel for barrel in a production war that helped send oil prices crashing to $10 a barrel in the late 1990s. He then reached an understanding to curb output with Mr. Naimi that helped prices climb for a decade.
Mr. Zanganeh was appointed to his second stint as oil minister in 2013 and has mostly frustrated his Saudi counterparts, including a Saudi-backed plan last April to place new limits on oil production in an agreement with Russia. The proposal failed after Iran refused to join.
Saudi Arabia’s new oil minister, Khalid al-Falih, is a longtime oil man in the kingdom, having run the Saudi Arabian Oil Co., or Saudi Aramco. He isn’t known for the relationships he has built among OPEC ministers, though observers said he would have much sway as the leader of the oil industry in a country that exports more crude than any other.
Mr. Zanganeh “has lots of advantages in OPEC, including Iran’s rising production and his experience,” said Jamie Webster, a fellow at the Center for Global Energy Policy at Columbia University.
By contrast, Mr. Zanganeh is a survivor in the abrasive cauldron of Iranian politics. He is known simply as the “Prince of the Ministers,” a nickname picked up after serving as in various ministerial posts over 25 years.
During his government service, he helped the war effort against Iraq by delivering food, building roads and developing devices to deflect French-made Iraqi missiles. He built dams as energy minister and served as oil minister under reformist President Mohammad Khatami. He was fired after President Mahmoud Ahmadinejad’s election in 2005.
He has been known to be a tough, even short-tempered negotiator, though one that can ultimately accept compromise. One official at China’s state-run oil company Sinopec recalled a conversation in which Mr. Zanganeh shouted and turned red as he exhorted a company to double production at an oil field.
A deputy to Mr. Zanganeh said, “He is so full of energy he’s hard to follow.”
People who know Mr. Zanganeh said he is motivated by a desire to use the country’s oil revenue to alleviate unemployment.
“All these young unemployed graduates sitting at home, it’s a disaster,” the official said.
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