ANKARA

Iran and the P5+1 world powers group of countries are taking the last steps of a possible final comprehensive agreement that would curb the nuclear activities of Iran in exchange for sanctions relief. 

Two of the major hurdles that the sides need to overcome in the Austrian capital Vienna are the timing and scope of sanctions removal, and the international inspectors' access to Iran's military sites and nuclear facilities. In addition, arms embargo on Iran is also reported to be an issue lately between the sides during the talks. 

Background

Iran's nuclear issue first became a hot topic in 2002, after an Iranian group of exiles said Iran had undeclared nuclear facilities. The International Atomic Energy Agency (IAEA) declared that these facilities included a uranium enrichment site at Natanz and a heavy-water production facility at Arak. 

In 2003, the IAEA said Iran failed to comply with nuclear Non-Proliferation Treaty (NPT) after it found traces of highly-enriched uranium in Iran. A year later, Iran signed the NPT Additional Protocol with the U.K., France and Germany and agreed to suspend its uranium enrichment activities. 

When Mahmoud Ahmadinejad was elected Iranian president in 2005, he relaunched the heavy water production plant in Arak. The next year, the U.N. Security Council imposed sanctions on Iran, blocking the import and export of sensitive nuclear material, equipment and ballistic missile development.

The nuclear negotiations between Iran and the P5+1 countries including the U.S., the U.K., France, Russia, China and Germany began in 2006, to ensure that Iran would not militarize its nuclear research to develop a weapon, but continue its nuclear program for civilian use. Meanwhile, the U.S. and the EU imposed additional sanctions on Iran including oil exports-imports, money transfers and financial limitations. 

On Nov. 24, 2013, an interim deal was reached, also known as the Joint Plan of Action, or the Geneva agreement. Iran agreed to curb some of its nuclear program in exchange for some sanctions relief. The agreement began implementation on Jan. 20, 2014. But the sides failed to reach an extensive deal six months later by July, 24, 2014. 

On Nov. 24, 2014, the sides extended the interim deal for another seven months and agreed to reach a framework deal by March 31, 2015, while a final comprehensive agreement would be signed by June 30, 2015. 

Postponed twice by a day, the sides reached a framework deal on April 2, 2015 in the Swiss city of Lausanne. However, Iran disagreed with the contents of the deal later on, claiming the U.S. had a different fact sheet. 

The final leg of the nuclear talks between the sides was held in Austrian capital Vienna, where the deadline of June 30 was also postponed several times. 

Positions of the actors

The U.S. and the P5+1 group

The U.S., which is the most influential member of the six-member group, wants Iran to limit its nuclear activities and use uranium enrichment only for civilian purposes. Meanwhile, the U.S. wants to gradually lift the sanctions on Iran, to wait and see the extent to which the country will abide by a final agreement. 

The U.S. Department of State published the details of the April 2 deal the same day. The deal asserts that Iran has to reduce its centrifuges by two-thirds, while the country cannot enrich uranium over 3.67 percent for at least 15 years. In addition, the country's excess centrifuges, which will be stored and can only be used as replacements, will be monitored by the IAEA.  

The country can only enrich uranium at its Natanz facility, and cannot do so at its Fordow facility for a minimum of 15 years. This facility has to be converted for use for peaceful purposes only, such as a research center.

The IAEA will have regular access to Natanz and Fordow, and closely monitor materials to prevent diversions to a secret program.

Iran can rebuild a heavy water research reactor in Arak, the design of which will be approved by the P5+1 group. The reactor will not produce weapons grade plutonium, but will support peaceful nuclear research. The deal stipulates Iran will not build any other heavy water reactors for 15 years.

Iran will remain a part of the Nuclear Non-Proliferation Treaty, NPT, which prohibits Iran’s development or acquisition of nuclear weapons.

The P5+1 also want the IAEA's inspectors to have access to Iran's military sites, to monitor and evaluate if the country's nuclear program has been militarized to build a nuclear weapon. 

The April 2 deal also says sanctions on Iran will be suspended after the IAEA approves the country's participation in taking the necessary steps in its nuclear program. However, the UN sanctions will be re-imposed if Iran fails to perform the requirements in the deal. 

Moreover, the UN will pass a new resolution to restrict non-nuclear related issues such as conventional arms and ballistic missiles. The framework deal will not include the removal of U.S. sanctions on Iran for terrorism, human rights abuses and ballistic missiles.

On May 22, the U.S. President Barack Obama signed a bill into law, which requires any final agreement with Iran to be reviewed by the U.S. Congress before the president can remove sanctions on Iran that were imposed by the Congress.

However, since the critical July 9 date has passed, the Congress will have 60, instead of 30 days, to review the final comprehensive nuclear agreement, if it is reached between Iran and the P5+1 group.

Iran

Meanwhile, Iran's parliament ratified a similar legislation on June 23, according to which a nuclear deal with the P5+1 countries would only be valid if sanctions on the country were removed fully and immediately. The bill also banned international inspectors' access to its military sites. Iranian President Hassan Rouhani approved that bill on July 12.

Iran claims its nuclear program is for civilian use and wants to continue nuclear research for peaceful purposes. 

Although agreeing to give the IAEA access to its nuclear facilities to some extent, Iran refuses international inspectors access to its military sites, defining it as 'red lines' while stating that such access would be a violation of its sovereignty and state secrets. 

In addition, Iran wants full and immediate removal of all sanctions on the country, and aims to increase its oil and gas production quickly by attracting foreign investment and global companies into its energy sector. By lifting the sanctions, Iran also aims to increase its oil exports as quickly as possible. 

According to a report by SVB Energy International LLC (SVBEI), a global energy consulting firm, Iran needs $70 billion of investment to reach its oil production capacity target by 2020. 

While Iran's oil production was 3.6 million barrels per day before the sanctions were imposed, this amount fell as low as 2.6 million barrels a day in 2013. Iran produced 3.1 million barrels a day on average in April and exported around 1.2 million barrels from this amount per day on average. 

In addition, Iran will rid its oil buy-back model for oil contracts, and plans to introduce a new model in September in London. The new oil contract model, also known as Iran Petroleum Contract (IPC), aspires to attract foreign investment into the country. With the IPC, Iran will set up joint ventures for the production of crude oil and natural gas with international oil companies (IOCs) who will be paid a share of the production. 

Meanwhile, Iran is estimated to have around 36-37 million barrels of stored liquids, oil and condensate, in floating storages that could be released immediately to the global oil market once the sanctions are lifted, according to SVBEI. 

"Any positive outcome of the deal will have an immediate downward effect on the prices, even before any actual Iranian production rises," the consulting firm noted. 

According to the global credit ratings organization, Fitch Ratings, Iran has 34 trillion cubic meters (tcm) of natural gas reserves, around 18 percent of the world's; while the world's largest gas field, the South Pars field in the Persian Gulf holds estimated proven reserves of 14 tcm. 

However, Fitch said in its report on July 10 that Iran is looking towards at least five years to boost its natural gas production and exports, even if sanctions on the country are removed immediately. 

"From 2005 to 2014, Iranian gas production increased nearly 70 percent to around 173 billion cubic meters (bcm)," Fitch said. The country's current gas production capacity is around 107 bcm, but the IEA expects 67 bcm will be added from the gas-rich South Pars field before 2020. 

Fitch emphasized that it is possible for Iran to export its gas to Europe via Turkey's Trans Anatolian Natural Gas Pipeline (TANAP) once the necessary infrastructure is complete.