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IRAN - OPEC Middle East Decision Makers.

Decision making in Iran's hydrocarbon sector is controlled by moderates with a pragmatic approach under the guidance of President Mohammad Khatami. From Khatami down, the decision makers are eager to see Western companies channel both capital and technology into this sector.

Iran is the only country in the world ruled by a Shiite theocracy based on the concept of Velayate Faqih, or State of the Supreme Guide. Whether for oil or any other matter, the emphasis from the top down has been on religious rather than academic qualifications. This has continued under Khatami's presidency. The subtleties of factional politics have remained, with the theocracy consisting of two main groups: the traditionalists, linked to Supreme Leader Ayatullah Ali Khamen'i, who control the judiciary and armed forces and oppose any opening to the West but favour free market policies within the Iranian context; and the leftist reformers of Khatami who remain in favour of state control over the vital sectors.

Sayyed Mohammad Khatami, Iran's 5th President in office since August 1997, has inherited much of his predecessor Rafsanjani's administration, which is a mix of moderate technocracts and traditionalists. In theory, he should be the highest authority in the hydrocarbon sector as he chairs the Supreme Economic Council, the SEC being the top decision maker on all the economic matters. But on Nov. 21 he told a special commission set up to monitor implementation of the constitution that, after three and half years in office, he had to show the public his lack of power. He said he could not prevent constitutional violations and attacked the judiciary. On the following day the traditionalists fired back by saying he was just preparing for the presidential elections, due in May 2001 (see Recorder in this week's APS Diplomat). He wants a second four-year term and hopes that he would then be able to amend the constitution to improve conditions for an adequate flow of foreign capital and technology into Iran.

Qods, one of the traditionalist dailies, on Nov. 19 quoted "an informed source" on parliament's Petroleum Committee as saying the latter body was planning to review all petroleum deals signed with foreign companies since the 1979 revolution. The source added: "After the great number of criticisms of the buy-back deals, and the very large profits made by foreign firms, the parliamentary (petroleum) committee decided to order the investigation". No one really knows what the outcome of this will be.

Bijan Namdar Zanganeh, the oil minister since Aug. 12, 1997 who succeeded Gholamreza Aghazadeh, had in mid-November begun listening to those who said Iran should be able to offer foreign firms better E&P terms than the ones under the buy-back formula. The idea is that foreign companies should continue to operate fields which they develop for up to 25 years, rather than for the buy-back's current period of five to seven years, to make sure these fields would not decline and production costs would remain low.

Zanganeh was previously minister of energy and was credited for having rebuilt the electric power sector after the 1980-88 war between Iran and Iraq. He has had a long relationship with Khatami, having served as his deputy at the ministry of culture and Islamic guidance in the 1980s. A business-minded moderate, he is a capable man and gets things done as planned. He has brought efficient figures to the oil ministry and the National Iranian Oil Company (NIOC), to replace some of those executives whom Aghazadeh had appointed since he became oil minister in 1985.

As oil minister, Zanganeh is chairman of NIOC's board. He also chairs the boards of National Petrochemical Co. (NPC), a subsidiary of NIOC, and other NIOC units. The most important units are headed by deputy oil ministers - as in the case of NPC President Mohammad Reza Nematzadeh who was given this post in September 1997, Mohammad Aghaie who heads National Iranian Oil Product Refining and Distribution Co., and Mehdi Hashemi Bahraman who heads National Iranian Gas Co.

Not happy with their past performance, Zanganeh got NIOC to be decentralised and gave autonomy to its various subsidiaries. He told a press conference on Nov. 30, 1997: "I believe that all units of NIOC...should operate strictly on commercial terms and should make profits". In late 1998, NIOC divided its upstream sector into five producing units: NIOC South, NIOC Offshore, NIOC Central, Pars Oil & Gas Co. (in charge of all aspects of the offshore gas fields of North Pars and South Pars), and a Caspian Sea firm called Khazar Exploration & Production Co. put under Mohammad Reza Shammasi. NIOC South, decentralised under a holding company, now has four geographical units: Marun, Karun, Masjid-e-Suleiman and Agha Jari.

NIOC also created PetroIran Development and Engineering Co. (PEDEC), as a management subsidiary in charge of foreign companies' upstream activities in Iran and of NIOC's upstream interests outside Iran. PEDEC is headed by Ali Akbar Ale Agha.

Ahmad Rahgozar, a former deputy oil minister and NPC president who until early October 1999 was head of NIOC's London operations and Kala (London-based procurement entity), was made NIOC deputy managing director and head of the newly structured NIOC International. Having taken over from NIOC"s International Affairs division, this is now made up of seven directorates: Export Operations under Farhad Tabatabaie, Crude Oil & Petroleum Products under Abolghassem Aryan, Oil Terminals under Parviz Rahat, Gas Exports under Mehdi Hashemi (son of ex-president Rafsanjani), Business Development under Mohammad Rouhani, Finance under Habibollah Nikbakht, and Research & Planning under Mohammad Mehdi Rahmati. The former head of NIOC's Int'l Affairs, Dr. Hojjatollah Ghanimi-Fard who was also a deputy oil minister, was made Rahgozar's deputy with a title of "Vice President, International Affairs, NIOC".

Mohammed Souri, president and CEO of National Iranian Tanker Co. (NITC), has been retained in this post which he has held since the 1980s. With a B.Sc degree in mechanics from Howard University and having pursued studies in political science, and sea and air shipping, Souri is a pragmatist and has previously served as deputy minister of commerce.

Seyed Mehdi Mirmoezi in August 2000 was made deputy oil minister for exploration and production. Later he also was made responsible for the buy-back negotiations and deals, replacing Seyed Mehdi Hosseini who became head of NIOC's London operations and Kala UK. A low-profile and capable expert, Mirmoezi ranks high among the deputy oil ministers. He continues to oversee PEDEC, the company which he used to head. Previously, Mirmoezi was made deputy managing director of NIOC in charge of its day-to-day operations, succeeding Ali Hashemi who in the 1999 general elections won a seat in parliament and later joined the Petroleum Committee. Before that post Mirmoezi used to be undersecretary of engineering and construction.

Hossein Kazempour Ardebili was in October 2000 made deputy oil minister in charge of Caspian affairs, succeeding Ali Majedi who became ambassador to Japan. Until then Ardebili was a senior advisor to Minister Zanganeh. A prominent petroleum expert, he was a deputy oil minister in the late 1980s. Subsequently he served as ambassador to Japan. Until recently he was also Iran's candidate for the post of OPEC secretary-general, a key function for which Venezuelan Energy Minister Ali Rodriguez was chosen on Nov. 12 to succeed Rilwanu Lukman of Nigeria from Jan. 1, 2001.

Mehdi Hashemi "Rafsanjani" remains a puzzle, even to NIOC executives as he wears too many hats. Apart from being director of gas marketing at NIOC International, he has long been managing director of Iranian Offshore Engineering and Construction Co. (IOEC) - a venture owned 51% by NIOC and 49% by the Ministry of Industries' Industrial Development and Renovation Organisation (IDRO). In June 1997 when the oil minister was Aghazadeh under the presidency of Mehdi's father. Hoj. Ali Akbar Hashemi Rafsanjani, Mehdi was also made managing director of PEDEC. It was then said the appointment was to ease the work of IOEC as contractor for PEDEC's $900m Phase 1 development of the offshore South Pars gas field, a super-giant, where the project was way behind schedule.

In 1999 Mehdi, pursuing his own private business as well, began promoting a liquefied natural gas (LNG) project for export, with the gas to come from South Pars. At the same time, however, the Energy Group of the huge Mostazafan and Janbazan Foundation (Bonyad) was promoting an LNG project which was presented at a Tehran oil and gas conference on Nov. 7, 1999, by Reza Shaeri. Shaeri heads Bonyad's Energy Group. (Bonyad, the biggest group of businesses in the Middle East, is a non-governmental entity owned by "the deprived" people of the Jaafari Shiite world.
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Publication:APS Review Oil Market Trends
Date:Dec 4, 2000
Words:1429
Previous Article:ABU DHABI - OPEC Middle East Decision Makers.
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