“We will cut the Chinese influence from the oil industry,” is what the new managing director of Iran’s national oil company said. But the threat was softened in later comments when he said, “We do have a need for Chinese equipment in emergency situations to quickly complete projects when Iranian manufacturers cannot provide the needed equipment in the specified time. So we have no choice but to buy from China.” So even though China has gradually replaced Europe and America in the last four years, and has even signed some contracts, the NIOC managing director’s threat has a long time to go before materializing.

The new manager, Ghalebani, defines his position on the goal of protecting domestic producers. According to Iran’s ISNA student news agency, while pointing to the existence of joint oil and gas fields in the Persian Gulf to the south and the Caspian Sea to the north, he identifies three obstacles facing the development of domestic equipment for the oil industry. “To produce oil equipment domestically, we have the means to purchase electronic equipment.” He outlined the three to be: “Structural and implementation problems in the government bureaucracy; barriers related to domestic manufacturers; and problems related to companies that use oil industry equipment.”

Speaking with ISNA Ghalebani pointed to the creation of a group charged to support domestic production and said, “Currently we are developing procedures and instructions on the strategic implementation and policies to support domestic production in the oil industry.”

News of support for domestic producers and contractors comes just days after Khatam-ol-Anbia company, the oil industry wing of the Islamic Pasdaran Revolutionary Guards (IRGC) which has received billions of Dollars from the government, announced that it was withdrawing from continuing the development of phases 15 and 16 of South Pars oil fields on which development work it began in early 2007 to produce LPG.

In the past four years, many private contractors in Iran have complained of the government measures to unilaterally support Khatam-ol-Anbia and at the same time ignoring the private sector. The manager of Phase 15 and 16 of the South Pars oil project in Pars Oil and Gas company told Khabar Online site, “Khatam-ol-Anbia had not choice but to pullout out of the project, because it is on the list of sanctioned companies which has created problems for us and in order to remove the obstacles in meeting the deadlines related to Phase 15 and 16 of the project.”

Khatam-ol-Anbia’s withdrawal was cheered among domestic producers and even Ahmadinejad stepped in and organized an exhibition titled “Expanding the Capabilities of Domestic Companies in South Pars Oil Projects” that was held on July 7 and 8. The exhibition was one result of an agreement that president’s office of technical cooperation recently signed with the association of domestic oil industry equipment manufacturers and Pars Oil and Gas Company. But such support comes at a time when experts in the field have clearly demonstrated that the main problem in the industry is the shortage of financial resources.

In this regard, Abolghasem Nobakhti from Pars says, “There is not concern with the pullout by Khatam-ol-Anbia, unless we do not receive financial resources at specific timelines. Nothing else can cause a delay. Fortunately, financial resources have been coming for this project since the beginning of the year.”

Ali Vakili, the managing director of Pars Oil stresses that government authorities now have gained trust in domestic capabilities to implement the South Pars Oil fields. “Iranian contractors must expand their capabilities and implement the South Pars project more seriously.”

According to official news agency IRNA, Vakili pointed out that technology remained one of the challenges in the project and said, “In the discussion over technology, there is a need for investment there.” He also said that because of the nature of the project and how gas would be extracted in the project, it was essential that environmental, safety and health standards related to workers be carefully observed. “We shall never deviate from those standards,” he said.

Chinese companies seem to be following the Russian ways vis-à-vis Iran in that they produce little while charging much. The Bushehr nuclear power project is the example they have in sight where schedules have been postponed for years while costs have escalated multi-fold.

On the other hand, domestic contractors who work with the government have been hurt because of the government’s non-payment or delayed payments. There were news reports that two managers of a company committed suicide because of the loans they owed to banks and the government’s non-payment of its dues to the company.

But the real gauge of the government’s commitment to Pars Oil’s development is perhaps best illustrated in the words of Bushehr’s labor official who said, “The employment situation in Oslovie in 2005 stood at 60,000 hired people whereas by the end of March 2010, the figures stood at 4,000 people.”

This is the record of an administration that has had oil revenues of over 400 billion Dollars in the first four years of its term. Domestic companies and producers have had little benefit from such windfall oil income. And now that oil revenues have fallen by 40 percent, one wonders what will really be the state of many of domestic manufacturers.