Lorenzo Simonelli, head of the company’s crude division, said he visited Iran in recent weeks to “understand what was taking place in the country.” GE will only proceed if government rules allow the company to do business there, he said, according to Bloomberg.
“Iran is a big market from an oil and gas perspective,” Simonelli said Wednesday in an interview at Bloomberg’s New York headquarters. “We will abide by the sanctions, but it’s a market where we used to transact.”
Geographic expansion is part of a broad growth strategy for London-based GE Oil & Gas that may include acquisitions and more-advanced product offerings. Building out the division is central to Chief Executive Officer Jeffrey Immelt’s transformation of GE into a more streamlined industrial manufacturer. The company has agreed to sell more than $150 billion of finance assets in the past year and is unloading the home-appliances unit.
For oil explorers and the service companies, Iran represents a huge bonanza. The Persian Gulf nation’s 157.8 billion-barrel cache of untapped oil is more than four times the U.S. endowment, according to the Energy Information Administration in Washington. The country also boasts large natural gas reserves.
A number of nations eased trade restrictions with Iran in January as the Islamic Republic curbed its nuclear program. Remaining U.S. sanctions allow foreign subsidiaries of American companies to operate in Iran, but they require a separation of those projects from U.S. employees and offices.
GE’s oil and gas division is one of the world’s largest equipment manufacturers for crude explorers. Its gear is used on land to boost production in aging wells and sits on the seafloor under miles of water to regulate the stream of crude coming from below the Earth’s crust.
GE is pursuing growth as it weathers a slowdown in global activity driven by the collapse in crude prices. Revenue in GE Oil & Gas fell 14 percent last year to $16.5 billion and may drop another 10 percent to 15 percent in 2016, the company has said.
The division has reduced headcount to about 39,000 from 44,000 during the downturn, which is “in line with the industry,” Simonelli said. “As we see the industry continuing to ebb and flow, we have to take the appropriate actions.”