Two articles have allowed me to understand the US-Iran dynamic and why Obama is so keen to seal the deal. Of course, the Telegraph story really is the answer. which was met with dismay by an online North Sea oil forum tonight: predicting more woe for the UK sector.
To begin. Israel in recent weeks have been making all out efforts to derail the US-Iranian talks, wheeling out the old adage that Iran is within five years of developing nuclear weapons. It is old because that is what enemies of the Iranian regime have been saying since the 1980s. If the Mullahs of Tehran really wanted nuclear weapons, they are really taking a leisurely time about it.
The first article is this from Arutz Sheva US Declassifies Documents Revealing Israel's Nuclear Program. In diplomatic terms, the US deciding to release details of the now-aging Sampson nuclear weapons system is a real (but not widely publicised) slap in the face for Israeli complaints over Iranian nuclear research. In no uncertain terms, the Israel government are being called a bunch of hypocrites by Obama. It is a particularly sharp rebuke because the Sampson system is now elderly and in need of either upgrade or replacement. The US is reminding Israel that if that is going to happen, they will need American help.
So if the US are willing to put Israel in its place over these negotiations, there must be something very big at stake. Indeed there is. The Telegraph story makes it clear that big oil wants to move into Iran after being forced to withdraw from the country following American-led boycotts. Now the story says that the oil majors want to return and that is indeed the case. Serious money will also be made in repairing Iran's existing fields though. They have not had free access to Western technology since the late 1970s and the wells are seriously inefficient. It would be no exaggeration to say that hundreds of billions of dollars of business will be generated for US companies if the barriers to trade and technology transfer come down and Iranian fields are resurveyed, repaired and reworked in the decades to come. Companies like Schlumberger and Halliburton are set to be major beneficiaries.
Where does this leave the UK sector? On the up side, a lot of British-based companies, many based around Aberdeen will be able to benefit from the opening of Iran to business. As this time, they are simply not allowed to trade. In 2013, BP had, at least for a time, closed the Rhum field in the North Sea as it is partly owned by the Iranian National Oil Company. The financial sector in both Edinburgh and London will also gain. Skilled individuals will doubtless find work, and in an environment much more stable and safe than to be found in neighbouring Iraq. The down side however is large. The North Sea is expensive to explore and develop. When it comes to oil, it isn't the price of a barrel that is the only factor. Thought is first given to how much will it cost to extract the stuff and then ship it to market. With calm waters, large areas of land-based fields (cheaper to develop than offshore) and sitting on the world's major tanker route, when Iran opens for business, it will only make the UK offshore by comparison more expensive and even less attractive to new investment.