Austrian-Iranian Economic Ties

27.06.2007

Austrian-Iranian Economic Ties

  • Austria continues to promote its exports to Iran, despite the Holocaust denial and threats to annihilate Israel from Iran’s president, Mahmoud Ahmadinejad.

  • Austrian exports to Iran have been covered by government guarantees. In 2005, Iran was fifth among nations benefiting from such guarantees, according to the “Österreichische Kontrollbank.”

  • Vienna opposes an effective sanctions regime by a “coalition of the willing” that would go current U.N. Security Council resolutions. The government even intends to grant new Hermes export credit guarantees for trade with Iran. “There are no recent changes with respect to loan guarantees for German exports to Iran. … According to the German Minister for Economy … Iran related export credit guarantees are still available,” the semi-official Nachrichten für den Außenhandel (News for Foreign Trade) wrote in February 2007:. The “Österreichische Kontrollbank” put out the same message on the very same day: cover for export credits would continue to be available.

  • This year, the Vienna-based company OMV signed a letter of intent to complete a joint natural gas project in Iran (for more details, see below).

  • Austrian officials have made clear that they have no plans to reverse their expanding economic ties with Iran
    • In June 2007, Austria’s Economy Minister, Martin Bartenstein, described Iran as a significant source of energy supply to Europe, stressing the importance of energy security.
    • In December 2003, Bartenstein, announced that Iran became Austria’s most important trade partner in Southern Asia. He added that this position should be tightened and strengthened in the future.1
    • Christoph Leitl, President of Austria’s Chamber of Commerce added: “What can not be connected through politics can be connected through trade and commerce.”2

  • Iranian officials have returned the favor:
    • In November 2006, the President of the Iranian Chamber of Commerce, [fill in the name] emphasized that: “Austria for us is the gate to the European Union.”
    • Iran’s Minister of Finance and Economic Affairs, Davoud Danesh Ja'fari, underlined Iran's strategic position in the Middle East and Austria's unique position in Europe, calling for enhancement of mutual economic ties.3

  • This Austrian policy of strengthened economic ties with Iran is a stab in the back for Iranian student and human rights groups, because a policy of “change through trade” is very unlikely to change the behavior of Tehran’s radical regime.

OMV’s Joint Natural Gas Project With Iran

  • On April 21, 2007, the Vienna-based company OMV signed a letter of intent to complete a joint natural gas project in Iran.

  • The investment, according to OMV, will go toward the development of part of the South Pars gas field in the Persian Gulf, a liquefaction facility as well as subscriber agreements for liquefied natural gas.

  • Although the company did not release any information about the size of the investment, the Standard reported that the contract with NIOC is valued at nearly 22 billion Euros during the next 25 years.4

  • OMV’s activities in Iran began with the signature of an exploration contract for the Mehr block with the National Iranian Oil Company (NIOC) in May 2001.

  • Here are some key facts about OMV:
    • Austria’s largest listed industrial company
    • Central Europe’s largest oil company
    • Exploration and production activities in 18 countries on five continents
    • Consolidated sales: EUR 18.97 billion EBIT: EUR 2.06 billion
    • Market capitalization: EUR 12.84 billion
    • 5,180 employees (Petrom: 35,813 employees)
    • Stockholder structure: OIAG 31.5%, IPIC 17.6%, free float 50.9%
    • 35% stake in Borealis A/S 50% stake in AMI Agrolinz International GmbH 10% stake in the Hungarian MOL group 45% stake in BAYERNOIL Raffineriegesellschaft mbH 50% stake in EconGas GmbH 51% stake in Petrom SA 34% stake in the Turkis Petrol Ofisi
    • Production target of 500,000 beo/d until 20105

 


1 Website of the Federal Ministry of Trade and Labor, December 2003

2 “Austria is Iran’s gate to the European Union”, OTS, November 23rd, 2006

3 “Iran, Austria booting economic ties,” PressTV, June 12th, 2007

4 "Breite Front gegen US-Einmischung", Der Standard, April 25th, 2007

5 OMV website