Negotiations with Universities
Mohammad Mostafavi, a startup chairman, said: “We are still at the beginning of the way. But since the downstream sector needs less investment and is less controlled by state, I think that there are more opportunities for the activity of startups. We are looking to provide the necessary ecosystem for innovation in the petroleum industry. Cooperation with universities on using innovation could be the first step.”
But CEO of Dana Energy Mohammad Iravani, also the Board member of the same startup, said: “Decrepit petroleum industry equipment has increased production costs in this industry, while productivity remains low. Startups can help cut these costs.”
He said: “We have to make efforts for the startups to become active in the energy sector, in which case we would hope for the formation of more startups and accelerators in this sector.”
He added: “We are currently in talks with the University of Tehran, Sharif University of Technology and Amir Kabir University of Technology to start work in the energy startup sector.”
High-Risk but Profitable
Sanctions will not remain on the petroleum industry for good. There are numerous opportunities for investment in Iran’s oil sector in light of great potential in this industry. Given the Ministry of Petroleum’s insistence on the use of modern technologies and methods that would help reduce costs or overcome some challenges and problems, startup companies take advantage of this chance and supply commercial commodities by engaging creativity and idea.
Iravani said: “There are many opportunities in Iran’s petroleum industry, where no serious activity has been done. Owing to our potentialities in Iran we can create new ideas to reduce production costs.”
He said there is potential in the downstream sector where due to the high risk of license, no company has so far entered. He added that startups can step into this sector, develop their own brands and work for commercialization.
Iravani said: “Currently startups are a high-risk business. They fail in 80% of cases, but if 20% accomplish their energy projects, they will be definitely influential.”
He touched on the achievements of Iran’s petroleum industry during years of sanctions, saying: “Although due to sanctions, we are lagging behind in the transfer of technology, the fact is that Iranian contractors built South Pars. Taking benefit from startups we can reduce our costs and boost productivity.”
Ambitious Plans with Startups
Iravani touched on Silicon Valley startups, saying they are ambitious projects. “The main feature of startups is their ambitiousness. I believe that we have to be ambitious in this regard, but move reasonably and rationally.”
Asked if Iranian startups would be able to operate outside Iran, he said: “Startups will be successful when they have their markets. If we want to create new business we have to engage experienced people and create value. Big companies have their own model in this sector and we can definitely compete with those outside Iran, too.”
Mostafavi said: “Startups are not costly. Although we are facing financing and capital attraction problems in the petroleum industry due to sanctions, the technology sector would need changes in the attitudes towards the petroleum industry rather than costs.”
He said: “The Ministry of Petroleum is influenced by global conditions. Until 10 years ago, there was no talk of petroleum industry. But now the Ministry of Petroleum is determined to benefit from new and creative ideas for overcoming petroleum industry challenges. Startups must be able to create ideas which would be commercialized.”
“In the new business environment, we welcome every new idea in the petroleum industry. We think that these ideas would be more successful in the downstream sector. However, we face no obstacle for activity in the upstream sector,” he added.
MOU to Support Startups
Last December, Dana Energy, Oil Industry Investment Co. (OIIC) and PEDC signed an MOU to develop the startup ecosystem, support new businesses and set up a venture capital fund in the energy sector. The MOU first led to the establishment of Apadana Ventures as a startup.
The Board of Directors of Apadana Ventures recently held a meeting. Mostafavi, Board chairman, highlighted the neglected role of technology in Iran and stressed the need for paying attention to innovation in the petroleum industry.
He said: “The issue of startup innovation and ecosystem is new in the petroleum industry and its stability requires empathy and time by all actors in the state and private sectors.”
Mehdi Gholamloo, CEO of Apadana Ventures, said plans had been made for launching energy innovation centers in cooperation with reputable universities.
“This company is determined to fulfil its role as a private sector developer of startup ecosystem in the petroleum industry and welcomes all actors in this sector,” he added.
Mir-Moezzi touched on new chances for innovative activities in the petroleum industry, saying: “What’s clear is that all petroleum industry sectors including upstream, downstream and midstream energy sectors have great potential. The presence of startups can be helpful for all of them to step into these sectors.”
Iravani pointed to productivity and cost reduction, saying innovative activities and startups would be a good solution for cost reduction.