GE explores Iran as a potential oil and gas business opportunity
By Staff Writer
Feb 17, 2016 06:50 AM EST
Feb 17, 2016 06:50 AM EST
General Electric Co. is looking to explore the oil and gas business opportunities in Iran, now that the international sanctions over the country's nuclear programs have been lifted. A company spokesperson confirmed the news of the chief executive of the GE oil and gas division recently visiting the country for this purpose.
CEO Lorenzo Simonelli stepped into Iran at a time when the once-largest exporter of oil was looking to boost its oil and gas industry and recover its global market share. The sanctions imposed on the country curbed its oil exports and adversely impacted the industry. "In line with the easing of sanctions, we have begun looking at potential business opportunities in Iran, while fully complying with the rules laid out by the U.S. government. Simonelli's visit is part of this effort," said the GE spokeswoman, as per Reuters.
However, there are still certain restrictions that make the American companies tread very carefully while conducting any business transaction with Iran. There are many layers of US laws against Iran in terms of human rights, terrorism and weapons that act as a barrier between the two countries. A US company can involve no US citizen or technology in any deal with Iran, and is allowed to transact only through a foreign subsidiary.
Simonelli is among the very few to represent than an American company is keen to explore business opportunities in Iran. But it's only been possible as GE Oil & Gas is a London-based subsidiary of the American parent company. GE has been attracted to the rapidly-improving oil and gas sector in Iran which is producing almost 3 million barrels of oil a day. This, although an improvement over last year's 2.7 million barrels a day, is still behind its pre-sanction days of 3.6 million barrels a day. As represented in The StockMarketWatch, Iran could help the London subsidiary to cushion the falling energy prices, especially when it expects its oil and gas revenue to drop a further 10-15% due to oil price slump.
According to The Wall Street Journal, GE already has in place a team of 50 in Dubai and Florence who've been familiarizing themselves with the rules and norms of conducting business with Iran. Every detail is being examined to ensure compliance with US regulations. On the other hand, to test the Iranian waters, Simonelli has reportedly met a top Iranian oil exporter possibly to push a deal for its oil-drilling and processing equipment which includes subsea pumps and pipeline-service units.
Apart from GE, other American companies have also started to show interest in Iran, but no news have been advertised regarding any official visits. The closest news would be Chevron Corp. sending their officials to an Iran-focused conference in Vienna. However, the same cannot be said for the European countries who have definitely moved much faster than the Americans in this regard, taking advantage of their age-old ties with Tehran.
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