ENI oversaw the first two phases of Darkhovin this past decade, with the completion of the second phase announced last week. At that completion, Iranian officials spoke lovingly of the continuing Iranian relationship with ENI.
But on Sunday, Naji Sadun, managing director of Iran’s Petroleum Engineering and Development Co. (PEDCO), announced that he was negotiating with a consortium of domestic firm’s and PetroVietnam for a $1.2 billion contract for the Darkhovin third phase, signaling ENI’s departure.
ENI had been the largest European oil firm still operating in Iran. With its departure, only small European firms remain working on oil projects in Iran.
Foreign firms were booted out of Iran by the 1979 revolution. But in 1995, then President Ali-Akbar Hashemi-Rafsanjani overcame opposition from hardliners to re-open the country and bring Western expertise back to Iran after a 16-year absence.
Rafsanjani even saw to it that the first such contract was awarded to an American firm, Conoco, in a clear sign that he wanted to try to get relations with Washington back to normal.
But the public reaction in the United States was swift and negative. Conoco was accused of going against American interests and forgetting what the Islamic Republic had done in the hostage episode. Republicans and Democrats both immediately picked up the public fury and Conoco became a national whipping boy.
Within days, Conoco bowed out of the contract and President Clinton issued an executive order that took sanctions to a much higher level, banning almost all exports to, imports from and investment in Iran.
The Conoco contract was later issued by Iran to Total of France and other contracts soon followed with many other European firms. Europeans were generally ecstatic at their ability to deal with Iran without having American competitors breathing over their shoulders. In Iran, many officials muttered that the Europeans were taking advantage of Iran in the absence of American competition.
But in the last four years, the political attitude in Europe has shifted dramatically. Where European publics and governments once snickered at the Americans for removing themselves from the Iranian market and laughed at American sanctions, now the EU has imposed its own sanctions and more and more European publics are asking why European firms have anything to do with the Iranian government given its human rights record.
Cases like those of Sakineh Mohammadi-Ashtiani, sentenced to stoning for adultery, and the recent execution of a Dutch-Iranian dual national for alleged drug trafficking, have further cemented European disgust with the Islamic Republic and moved European public attitudes more in line with American public attitudes.
No contract has yet been signed with PetroVietnam for Darkhovin’s third phase, but Iranian officials say they expect it to be signed within two months. It will signal the shift by Iran from European to Asian partners.
Darkhovin development began in 2001. The first phase saw the production of 50,000 barrels a day of crude oil from the field in 2005. The second phase, completed February 8, took production to 160,00 bpd. The third phase is to raise output to 200,000 bpd by 2016.
