Startups, New Energy Business Sector
A new business sector is emerging in Iran’s petroleum industry. Several years after the formation of knowledge-based companies in this vital sector, it is now oil startups’ turn. The startups are expected to develop creative ideas with a view to reducing production costs and boosting productivity in the petroleum industry.
Iranian energy players say sanctions provide the best opportunity for startups to show off.
Iran’s petroleum industry has been into ups and downs particularly following the US’s 2018 unilateral withdrawal from the 2015 Iran nuclear deal and the ensuing reimposition of sanctions.
The United States has left no stones unturned to zero Iran’s oil exports and slow down the pace of projects in this industry. However, the experience of sanctions shows that Iran’s petroleum industry knows how to transform threats into opportunities.
During the first round of sanctions imposed on Iran under Mahmoud Ahmadinejad, many foreign companies left Iran. However, Iranian contractors developed some phases of the giant South Pars gas field and set records for project startup in this massive offshore gas reserve shared with neighboring Qatar.
Now the conditions have become tough for the activity of international companies. Therefore, a new business is taking shape in the petroleum industry. Relying on technology and creativity, this new business can address some petroleum industry challenges without having to spend enormous money.
Oil startups have just started their activity and the Ministry of Petroleum has offered its full support for these companies. The Office of Deputy Minister of Petroleum for Research and Technology is tasked with facilitating the activity of these companies in the petroleum industry. Oil industry experts are optimistic about the activity of these companies currently active in Iran.
No Huge Finance Needed
Mehdi Mirmoezzi, CEO of Pasargad Energy Development Company (PEDC) told "Iran Petroleum" that in the light of sanctions, the ground is prepared for new businesses, particularly startups.
“Modern businesses are technological and creative in nature. Therefore, they need new idea and thoughts with small capital,” he said.
Mirmoezzi, a former CEO of National Iranian Oil Company (NIOC), added: “Sanctions will harden conditions for high-tech and big capital activities because the necessary ground is not prepared for them. But the time is now ripe for us to get involved in startups, because it is related directly to creativity and innovation without having to provide big finance.”
Iran holds events about the activities of startups. That indicates state and private organs’ special support for new businesses. However, the engagement of startups in high-risk oil and gas sectors is totally new. Add to this the confidentiality of significant parts of these technologies for at least a specific period of time.
Iranian startups are stepping into a sector for which there is not much experience. However, the companies that manage to step into the phase of commercialization by developing new ideals will be holding the bargaining chip in the competitive atmosphere of Iran’s petroleum industry.
Iran’s petroleum industry currently needs investment and modern technologies to enhance productivity. The new model of oil contracts – Iran Petroleum Contract (IPC) – was developed to attract investment and transfer technology into this industry.
Now as the sanctions get tougher, new restrictions are created for foreign investors. The question here is to know if startups can get involved in the upstream sector.
Mirmoezzi said: “In the upstream sector, particularly surface equipment and installations, there is good ground for the activity of startups. Of course, we are studying options to see where we can step in so that we would develop our strategies in such direction.”