IEEJ：June 2016○ｃ IEEJ 2016

Special Bulletin
A Japanese Perspective on the International Energy Landscape (274)June 1, 2016

11th International Energy Conference in IranKen Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn May 30 and 31, the 11th International Energy Conference took place in the Iranian
capital of Tehran. The National Energy Committee of I.R. Iran under the World Energy Council
sponsored the conference along with Iran’s energy and oil ministries. Under the theme of “Energy
Dynamics in the Changing World,” senior Iranian government officials and business leaders andspeakers from Europe, North America and Asia were invited to discuss various problems including
Iranian problems in the changing international energy market. The number of participants in theconference was left unavailable but it is estimated at around 500.
The conference takes place every two years. The latest one following the previous one heldin 2014 came after a major change for Iran, which is the lifting of Western economic sanctions.
Based on discussions at the conference and my talks with local energy experts, I would like tosummarize my view on the energy situation involving Iran.
The first point that impressed me at the conference is that Iran is greatly interested inimproving and upgrading its energy supply and demand structure through the promotion of energy
conservation and renewable energy, based on the lessons learned from the ongoing global trends.
The conference included special sessions on both renewable energy and energy conservation
respectively, where overseas experts made keynote presentations followed by discussions among six
to seven Iranian panelists including government officials. The panel discussions indicated Iran’sstrong interests in the present situation, expectations and challenges regarding the promotion ofenergy conservation and renewable energy. It may be needless to say that Iran is one of the leading
oil and gas producers in the world with abundant oil and gas resources and is coming back to theinternational oil and gas market after the lifting of the economic sanctions. As described in the latter
half of this bulletin, I think that the most important matter in discussions at the conference was theimprovement of Iran’s energy supply and demand structure, although discussions at the conference
naturally included those on oil and gas.
Particularly, energy conservation or energy efficiency improvement seems to be a very
important challenge for Iran. Iran has taken advantage of efforts mainly by its industry andcorporations to overcome difficulties including the Iranian Revolution, the Iran-Iraq War, U.S.
sanctions and Western sanctions over the nuclear development problem. It has tried to overcome
various energy supply and demand problems with domestic measures. In a sense, Iran has madesome achievements in that endeavor. At present, however, Iran has lagged behind in introducing the1IEEJ：June 2016○ｃ IEEJ 2016

latest technologies and equipment, having no choice but to use old-fashioned, obsolete or lessefficient equipment or systems. It seems that Iran is greatly interested in improving its domesticenergy supply and demand structure from a long-term viewpoint at a time when it is to reconstruct
its economy in a full-blown manner following the lifting of the Western economic sanctions.
Another interesting point in this respect was that Germany’s presence at the conference
was great with many German presenters participating. Particularly, German presenters emphasized
the importance of renewable energy, based on their country’s experiences. As environmental
protection initiatives were to be enhanced under the Paris Agreement in which Iran participates,
German presenters noted that renewable energy is free from carbon dioxide and has become the mostcompetitive electricity source with renewable energy power generation costs lowered sharply underpolicy support. They also pointed out that renewable energy would be the most important energy
source in improving the energy supply and demand structure in the future.
German presenters thus emphasized advantages of renewable energy while limitingdiscussions about problems such as the intermittency of wind and solar energy supply. There is someconcerns if their presentations were not well-balanced or based on a one-sided view. I am uncertain
about how such German presentations moved Iran for which how to exploit its abundant oil and gas
resources is an important challenge. Impressively, however, German presenters stressed theinnovativeness of German technologies, systems and institutional initiatives for renewable energy
and energy conservation, indicating Germany’s proactive approach toward Iran for exploringbusiness opportunity. As a matter of course, Iran is greatly interested in cooperation and businessdeals with Japan regarding energy conservation that is a matter of great concern to Iran. It may be
important for Japan to enhance its approach toward Iran under government-private cooperation.
Second, regarding oil and gas, I was very much interested in challenges for Iran in aspecial situation where the county was coming back to the international oil market on the lifting of
the sanctions amid low oil prices. Major topics in discussions at the conference included a long-term
outlook on oil and gas demand under the influence of climate change policies, the fate of the U.S.
shale revolution bringing about the current oversupply, and the present and future situations for theAsian market as a major sales outlet for Iran. Indications were that these topics are major matters ofconcern to Iran. Oil market players believe that Iranian crude oil sales and production since April
have recovered the level which is slightly lower than before the economic sanctions. Iran is seeking
to restore pre-sanction levels with additional efforts. In this sense, it seems that Iran managed tosucceed in addressing problem or challenge regarding its comeback to the international oil market.
As global oil demand continues to increase with non-OPEC oil production falling, themarket is going in the direction of rebalancing. As crude oil prices have rebounded to around $50 perbarrel, still far below levels in the $100/bbl period, the market is in a temporary lull. In this situation,
Iran will seek to restore the pre-sanction oil production level, expand oil and gas production throughthe introduction of foreign investment and increase its presence in the international market. In thisrespect, Iran has delayed the official announcement of the so-called Iran Petroleum Contract as aframework for the introduction of foreign investment. Interestingly, Iranian officials frankly noted
2IEEJ：June 2016○ｃ IEEJ 2016that domestic discussions and coordination on the matter had been prolonged.
Meanwhile, some observers speculate that Iran is increasingly frustrated with slower
efforts than expected at the time of the lifting of the sanctions for oil, gas and other investment deals
as Iran had placed great expectations on foreign investment. In addition to the abovementioned
domestic and external conditions, Iran has various challenges regarding relations with neighboring
Middle Eastern countries including Saudi Arabia. The situation involving Iran’s oil and gas
development and exports is at a temporary lull now. However, various turbulences may arise. Future
developments including those related to Japan will be worthy of attention.

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