Iran is showing signs of attracting major foreign investment in its long-neglected oil fields. That’s good news for its economy, and it could make it harder for Donald Trump to reinstitute sanctions against the country should he try to fulfill his promise to rip up President Obama’s controversial nuclear deal with Tehran.
On Wednesday, Royal Dutch Shell PLC, more commonly known as Shell, announced that it was agreeing to develop major oil and gas fields in Iran for the first time since sanctions related to the country’s nuclear deal were lifted at the beginning of the year. It’s not a done deal — Shell and the Iranian government have just signed preliminary agreements known as “memoranda of understanding,” and it doesn’t come with an investment commitment.
But if they do end up working out, it’s a major win for Iran, whose economy was devastated by international sanctions imposed because of its quest for a nuclear weapon. The two oil fields involved in the deal are estimated to have about 8.2 billion barrels’ worth of recoverable oil, which is equivalent to about 15 percent of the proven crude reserves in the US.
The French energy firm Total, which signed a multibillion-dollar contract with Iran for its huge South Pars gas field in November, is also now in talks about developing Iranian oil fields.
Iran regaining status as normal is a thorn in Trump’s side
If foreign investment picks up steam in Iran, it will pose a challenge for Trump. His goal to revisit or rip up the Iran deal — which he’s called “the stupidest deal of all time” — becomes harder the more deeply major Western companies get involved there. That’s because the more Iran is reintegrated into the global economy, the more reluctant the world’s major powers will be to reverse course and sever ties with Iran again.
Putting together the Iran deal was a grueling process that took several years of negotiations with a number of other world powers (the UK, France, Russia, Germany, and China). Iran was finally freed from crippling sanctions in exchange for shuttering thousands of centrifuges and getting rid of most of its enriched uranium.
All the countries that worked with the US and Iran are invested in the current deal, diplomatically. And as those countries start to export goods to Iran and invest in its resources — that is, benefit economically — they’ll have even deeper interests in keeping the deal as is and more reluctant to use economic isolation to influence Iran.
But before any kind of talks with other countries about the Iran deal, Trump could end up using a unique lobbying strategy he has already made conspicuous use of in his brief time as president-elect: pressuring corporations directly.
On Tuesday, Trump put a dent in Boeing’s shares after slamming the company on Twitter for how much the new Air Force One jets it’s slated to build are expected to cost. He also tweeted about negotiating directly with the air conditioning manufacturer Carrier to convince it to keep a thousand jobs from being sent off to Mexico. It certainly seems within the realm of possibility that Trump could try to tweet-shame oil companies looking to make money in Iran.