Foreign Minister Manuchehr Mottaki addressed the audience on the second and concluding day of the Eleventh Annual Oil and Gas Forum, dubbed "New Developments in World Oil & Gas: Challenges & Opportunities." Minister Mottaki stated that Iran needs to adopt a firm strategy to use all its potentials for existing in global gas markets. He noted that Iran has always used "economic diplomacy" as a tool for pushing ahead with its main foreign policy objectives, adding that the current government has paid due attention to the use and promotion of economic and trade diplomacy. Due to their pivotal status within the national economy and their role in global political developments, oil and gas have always played an important role in the government’s diplomacy, he stated.

Manuchehr Mottaki, Foreign Minister

Pointing to the negative balance in Iran’s gas exports in the previous year, the Minister concluded that the gas market potentials have not been fulfilled even in their early stages. He said oil and gas resources are concentrated in a small geographical location, adding: "Progress towards regionalism with oil and gas as the axis sounds imperative." He also said such a regional union can not only create collective security in this volatile part of the world but strengthen economic bonds and political power.

The Foreign Minister cited the logic and mechanism behind the successful cooperation among the countries forming the nucleus of Euro currency and said EU member states had launched a new cooperation on another energy carrier, coal, over the past decades. "Our region must also work on establishing new oil and gas bonds in the Persian Gulf region," he stressed.

Structural changes in oil and gas companies, Mottaki noted, require strategic partnerships for production and distribution at the international level. Forums such as this can discuss such issues and decide about ways to shape the trans-regional groups, the group Iran belongs to economically speaking, who are the country’s strongest rivals in the field, and which neighboring countries are suitable for cooperation.

Referring to the irregular consumption of energy carriers in Iran, the minister underlined the need for raising energy productivity, conversation, sound consumption management, sustainable development, and environmental protection. He also highlighted the importance of modern technology in this matter, stating, "Of course, we would certainly need superior foreign technology and financing to do this."

According to Mottaki, one of the most costly and difficult missions of the country’s diplomatic machinery is to assist with negotiations in order to ensure that they are on the right track. These efforts, he boasted, have resulted in arming the country with nuclear energy technology.

On gas exports, he said: "Russia is the most important player in global gas exports with monthly exports of 150 billion cubic meters out of a total of 180b. According to statistics, Iran imported 0.5b cubic meters of pure gas annually."

At present 16 percent of refinery operations were devoted to gasoline production and the country intends to "raise the figure to 34 percent by 2012." He said the refineries would refine a minimum amount of heavy oil and produce more gasoline. "We hope the operations would be completed in 2009."

Nematzadeh, who is also president of the National Iranian Oil Refining and Distribution Company (NIORDC) noted that the budget allocated for gasoline import is still being examined by the Majlis and the Management & Planning Organization and, so far, no decision has been made. In this light, Iran has started extensive cooperation with Indonesia, China, Malaysia, and Singapore for construction of new refineries. "Efforts are being made to convert a great portion of heavy crude to gasoline," he stated, pointing to upgrading plans at Isfahan, Tehran, Bandar Abbas, and Arak refineries among the measures taken as of yet.

"$24 billion worth of investments will be made in the petrochemical sector during the Fourth and Fifth Five-Year Development Plans (2005-2015) making Iran the number one producer of ethylene, methanol, and aromatic in the region."

Addressing the International Oil and Gas Forum, he added that continued instability in the Middle East could broaden the gap between supply and demand in the future. "This, in its turn, would impose high production costs on the countries." Pointing to the figures published by OPEC about upstream capacity building projects, he said OPEC crude production capacity will rise from 32.4 million bpd in 2005 to 37.5m bpd in 2010.

Dr. Mahdi Assali, former president of International Institute for Energy Studies (IIES), also present at the conference, said that OPEC member states are the only developing countries with a growing energy consumption trend between 1970 and 2005. Furthermore, among OPEC member states energy consumption in Iran and Saudi Arabia enjoys an unusual upward trend. He added that due to the significance of nonrenewable energy sources, governments must play a fundamental role in energy policies.

The conference was hosted by the International Institute for Energy Studies (IIES) in order to discuss geopolitical issues (including the developments in the Middle East oil & gas sector over the past year), economic issues, technological developments and investment opportunities in Iran’s oil & gas industry.