Britain’s Financial Times reports that Iran is planning to persuade international companies to invest in its oil sector by offering them more lucrative contracts. The move is part of an effort to repair Iran’s failing economy and improve the country’s relations with the West. Running parallel are Tehran’s and Washington’s constructive talks about curbing Iran’s nuclear programme. Iran hopes that these talks may help loosen the US-led sanctions that have crippled its oil industry.
Mehdi Hosseini, an adviser to the oil minister, said the current system of “buyback” contracts – which do not allow foreign companies to book reserves or take equity stakes in Iranian projects – would be scrapped. He also revealed that the Iranian government was developing a “win-win” form of contract so leading companies “whether American or European” could benefit. Details are expected to be revealed in London next March as part of an effort to attract at least $100bn in investment over the next three years.
The change would be considerable for a regime that has traditionally been hostile to any form of foreign ownership of its vast oil and gas wealth. Iran has the world’s largest gas reserves and fourth-largest oil reserves. “We hope that with these preparations the language of our contracts will be very, very close to international norms and that we will see them [international companies] queuing up once again,” Mr Hosseini said.
However, Robin West, a senior adviser to IHS Energy, a consultancy, said, “Iran has a long history of aggressive resource nationalism, and I doubt that will change. They have always had very aggressive fiscal terms and always tried to shift the investment risk to operators while keeping the lion’s share of revenue.” But he said the Iran’s reserves required investment from western oil firms and Tehran would have to offer “extremely attractive terms” to attract them. “If they do, it’ll be a real break with the past,” he concluded.
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