By Russ Read
The Islamic Republic of Iran drastically increased its oil production by more than 300 percent one year after sanctions were lifted due to its nuclear agreement with the U.S. and other world powers.
Iran increased oil production in 2016 from 870,000 to 3.67 million barrels a day by November, an increase of approximately 321 percent. The remarkable surge in production followed an easing of international sanctions brought about by the signing of the Joint Comprehensive Plan of Action in July 2015, commonly referred to as the Iran nuclear deal.
With production back to pre-sanctions levels, Iran now needs investment partners to help get the most out of its oil fields going forward. In response, the oil ministry qualified 29 international oil companies to bid on investment projects. Among the most notable qualified corporations is China’s state-owned China National Petroleum Corp.
China was one of the members of the P5+1, the group of countries that negotiated the nuclear deal with Iran in 2015. The bid for investment in Iran’s oil infrastructure could potentially represent a conflict of interest preventing China from snapping back sanctions if Iran is found cheating the nuclear agreement.
Russian oil company Gazprom, which is also on the list, has already signed a preliminary investment agreement with Iran. Russia was also a member of the P5+1 during the nuclear negotiations.
Iran hopes to gather more than $100 billion in foreign investment to renovate its oil infrastructure, a substantial increase to the approximately $4.15 billion in foreign direct investment that currently exists in the country.
Iran continues to engage in aggressive actions against the West, despite the recent detente on its nuclear program. Iranian ships harassed U.S. Navy vessels in and around the Persian Gulf, bolstered Syrian President Bashar al-Assad and supported the Houthi rebellion in Yemen throughout 2016.
President-elect Donald Trump promised to repeal the Iran deal during his campaign, noting he would tear up the agreement upon entering the White House. His campaign team later walked back those comments, noting the deal would instead be “renegotiated.”