Iranian Oil Minister Bijan Zanganeh speaks at an oil and gas convention in Tehran, 5/6/14. ATTA KENARE/AFP/Getty Images
Iran is expecting a “tsunami” of foreign tourists following the conclusion of a nuclear deal and the lifting of international sanctions. “Nearly 20 million foreign tourists will probably visit Iran within the next five years,” said Mohsen Qarib, head of the Iran Touring and Tourism Investment Company, on Tuesday. With a June 30 deadline for a nuclear agreement with the P5+1 (comprising the U.S., Britain, France, China, Russia, and Germany) approaching, Iran is envisioning a major economic comeback following the crippling sanctions of the past few years.
Assuming a deal is reached, Iran intends to quickly ramp up its oil and gas exports. Western sanctions had halved Iran’s oil exports to approximately 1 million barrels per day (bpd), but in anticipation of the sanctions’ end, Iran has stockpiled as much as 40 million bpd presently in its fleet of state-owned supertankers at sea. The country’s Oil Minister, Bijan Zanganeh, has said that Iran would pump another 500,000 bpd within a month of lifting sanctions, increasing to 1 million additional bpd within six or seven months, although most analysts believe it would take longer to achieve such a significant increase.
But Iran has enormous oil and gas reserves, and it intends to resume its key role in OPEC (where it used to be the second-largest producer after Saudi Arabia). Oil and gas exports will continue to lead the country’s economy, and Iran has already informed OPEC that it will be returning in force, implying that it will sell its oil even at low costs if the other members do not scale back their output. And placing economics over ideology (perhaps just temporarily), the government is actually trying to entice Western energy companies back to Iran to invest and work there to expand oil and gas production.
According to Azizollah Ramazani, international affairs director at the National Iranian Gas Co., Iran needs $100 billion to rebuild its gas industry- and half of that will need to come from foreign producers. He added that once sanctions are lifted, Iran plans to increase gas exports seven-fold to 200 million cubic meters a day in four years. To satisfy strong domestic demand, it wants to raise total production to 1.2 billion cubic meters a day in five years, from 800 million now, he said.
But while Iran can at least map out its hydrocarbon deposits, it faces a more uncertain future with its ambitious plans to expand tourism. The potential is there- amongst other natural and cultural attractions, the country contains 17 UNESCO World Heritage sites- and the tourism sector has been neglected for decades since the Islamic Revolution in 1979. But can Iran attract enough tourism to generate $30 billion by 2025, making it the country’s second largest source of revenue after oil, as the Director of Iran’s Cultural Heritage, Handicrafts and Tourism Organization, Masoud Soltanifar, has predicted?
There is good cause for skepticism. “In the event of a tourist tsunami in the coming five years, the existing infrastructure is not suitable to receive it,” Qarib said. Iran’s 70 current hotels can only handle 350,000 guests; it will need to build hundreds of new hotels and improve training in the sector. Global perceptions are another matter entirely, and they are likely to keep Western tourists (and Americans in particular) away as long as the Ayatollahs are in power.
And if no deal is finalized, then all bets are off.
