TPT May 2016

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62 MAY 2016
G LOBA L MARKE T P L AC E
Post-sanct ions I r an
‘The idea is simple. They lift the sanctions.
We send the pipes.’
Interviewed in Volgograd, Russia, by the New York Times ,
Sergei G Chetverikov, director of the Tube Metal Co (TMK)
plant there did not have to spell out which sanctions were
meant, or the intended recipient of the pipes. The return of
a newly respectable Iran to the ranks of the world’s deep-
pocketed customers is of major interest to the company that,
in the Soviet period, provided up to 40 per cent of the tubulars
used in Iran’s oil industry – including casing set into oil wells
and pipes carrying natural gas over the desert.
When the United Nations imposed sanctions on Iran in 2006,
Russian companies like TMK had to retreat. As reported
by the Times’s Andrew E Kramer, the Russian pipe maker
turned its attention to the US. As the shale boom took off, the
company bought 12 factories in North America. But, energy
prices falling, TMK’s North American division, Ipsco, has idled
two plants and plans to lay off 40 per cent of its 2,700-strong
workforce.
Now, back home in Russia, TMK – the biggest supplier of
pipes to the world’s oil and natural gas producers – has a new
focus. (“Ready and Willing to Sell to Iran,” 8 February)
The Russian energy giants Gazprom and Lukoil are weighing
investments in an oil field and in a liquefied natural gas (LNG)
project on the Persian Gulf. Mr Kramer also noted that Eurasia
Drilling Co, an oilfield services business, and Tatneft, a second-
tier Russian oil company based in Tatarstan, a predominantly
Muslim region east of Moscow, both have good prospects.
So, too, has TMK. Iran holds the second-largest Middle East
oil deposits, after Saudi Arabia, and by some estimates the
world’s largest reserves of conventional natural gas. Even
before sanctions were lifted, Iran signed deals to export gas
to Iraq and Pakistan.
But its industry lacks the pipes to deliver that gas, as companies
woefully underinvested during the era of sanctions, observed
the Times. In total, analysts have said, Iran could spend as
much as $100bn rebuilding its natural gas pipelines. And TMK
thinks it is in a good position to capture much of that business.
› “At its gigantic metal works here, [TMK] pours, grinds, and
welds the huge steel straws that pull much of the world’s
oil out of the depths,” wrote Mr Kramer from Volgograd. Less
lyrically, the company says 20 per cent of the oil brought to the
surface at one point or another around the globe flows through
a TMK tube, including high-end varieties of pipe made for the
insides of oil wells.
“We make the pipe Bentleys,” declared TMK’s vice-president
for strategy, Vladimir Shmatovich. And his company has plans
to increase its output of those esteemed products.
› Meanwhile the lifting of international sanctions that favours
TMK will confine certain others to the sidelines. The US
maintains selective sanctions that prohibit most commercial
ties with Iran, so American companies are not permitted to
vie for contracts with its oil and natural gas industry. The US
restricts its nationals to trading with Iran solely in commercial
airplanes and Persian rugs.
Re-engagement wi th Cuba
Largely closed out of the new oppor tunities
presented by Iran, the US is at an advantage
nearer home
A historic agreement, signed on 16 February by officials of
the US and Cuba, provides for the reopening of scheduled
air services between the two nations for the first time in 53
years. On the same day, the Cuban government launched
what Roger Yu of USA Today called “a full-court press” to get
American companies to step up economic investment in the
island nation 90 miles from Key West, Florida.
This intention was apparent from the public comments of
Cuba’s minister of foreign trade and investment, among
the first by a top Cuban government official in the US since
President Barack Obama normalised diplomatic relations
with Cuba in late 2014. “I believe the road we have started
to walk on is the right one,” Rodrigo Malmierca Díaz said at
a press conference following his speech at the US Chamber
of Commerce in Washington. “No matter what, we’re going
to maintain the disposition to normalise our relations with the
US.”
Pledging that no US companies would be discriminated
against by Havana, Mr Malmierca Díaz has now made plain
that Cuban opportunities abound for firms other than telecom
providers. It remains only for Congress to lift the decades-
old US commercial, economic and financial embargo of
Cuba. (“Cuba’s Trade Minister Calls for End of Embargo,”
17 February)
But USA Today pointed out that, even while el bloqueo remains
in place, the Obama overtures have loosened business and
investment restrictions on the island nation “and have raised
hopes for expansion-minded US companies tempted by an
untapped market with a reputation for quality education and
advanced engineering training.”
Notably, the Treasury and Commerce departments have
introduced a series of rule changes to encourage US
companies to consider Cuban investment. And Mr Malmierca
Díaz said he plans to hold talks with government officials
for further rule changes that would accelerate economic
investment, and to meet with American business executives.
The Cuban trade chief’s speech in Washington in February,
aimed at wooing investors, made a strong beginning. These
highlights were noted by USA Today:
• Cuba’s gross domestic product (GDP) grew 4 per cent
in 2015, with manufacturing and construction among the
leaders.