Tags: Iran | OPEC | oil | investment

Iran Will Meet Oil Companies to Seek Investment, Minister Says

Wednesday, 04 December 2013 09:23 AM

Iran plans to meet international oil companies as soon as March to try to entice investors to its energy industry once world powers lift sanctions, the Islamic republic’s oil minister said.

Iran, once OPEC’s second-largest producer, is talking with European companies about future projects, Bijan Namdar Zanganeh told reporters today in Vienna. The minister said he hopes Exxon Mobil Corp., Royal Dutch Shell Plc, BP Plc, Eni SpA and Statoil ASA will invest in the Persian Gulf state. Iranian officials will meet with international companies in London in March, he said, declining to identify them.

The country agreed last month to restrict work on its nuclear program for six months in return for a loosening of sanctions that offers about $7 billion in relief and access to $4.2 billion in oil revenue frozen in foreign banks. The accord leaves in place banking and financial measures that hampered crude exports. Zanganeh said he hopes the initial deal will lead to an agreement unfettering all sales of Iranian crude.

“We want to return to the market,” he said. “It’s our main priority,” Zanganeh said in the Austrian capital, where he’s attending a meeting of the Organization of Petroleum Exporting Countries. The group agreed to keep its crude output target unchanged at 30 million barrels a day, according to Ali al-Naimi, Saudi Arabia’s Oil Minister.

OPEC’s ‘Wisdom’

Iran wants to produce 4 million barrels a day of crude after international sanctions are lifted, “even if it goes down to $20 per barrel,” Zanganeh said. “Under no circumstances will I renege from Iran’s right to produce 4 million barrels a day and I am sure OPEC will exercise wisdom in this matter.”

The country hasn’t approached any U.S. oil companies, though it has spoken with and plans to meet some businesses that are based in Europe, Zanganeh said. “I’m not sure they would like me to mention their names,” he said in an interview posted today on the Oil Ministry’s news website Shana.

Iran pumped 2.65 million barrels of crude a day in November and hasn’t produced 4 million since August 2008, according to data compiled by Bloomberg. It’s exporting about 1 million barrels a day and may ship about 1.1 million barrels of crude and 300,000 barrels of condensate daily in the next Iranian year starting in March, Shana reported yesterday. Figures in the government budget are based on prices at $100 a barrel, Shana reported.

Spurning Quotas

“I will not follow any limitation for returning to the market, to the previous level of production that we had,” Zanganeh said, addressing the question of whether OPEC should assign an output quota to Iran when it starts to produce more crude. “At least we will return to 4 million barrels a day.”

The Iranian minister is “in a tough spot,” said Jamie Webster, an analyst at IHS-PFC Energy, speaking in Vienna. “He has to say that for a negotiating position within OPEC. You start there, and then you back off to what you’re actually going to do. If this guy is willing to go to $20, there’s a real concern with U.S. production,” he said, referring to the surge in U.S. output of shale oil.

For now, laws forbid U.S. and European companies from striking energy deals with Iran, and other nations risk being excluded from the U.S. banking system if they violate sanctions. U.S. officials have said that Iran will not be allowed to increase its crude exports unless it accepts a verifiable agreement over its nuclear program. Iran says its atomic research is for civilian use only.

Past Partners

Several companies including Shell, BP and Total had partnerships in Iranian energy projects in former years.

Shell complies with all applicable international sanctions against Iran, Sarah Bradley, a London-based spokeswoman for the company, said in an e-mail. Shell stopped upstream commercial activities in Iran in 2010 and halted trading with the country last year, she said.

“As this is likely to be a very complicated political process, we need to take our time and watch the situation carefully,” Toby Odone, a London-based spokesman for BP, said in an e-mailed statement. “Iran clearly has huge resources” and “a lot of potential,” he said.

The Gulf nation, which is reviewing its oil developments contracts, won’t offer production-sharing agreements for future work, Zanganeh said.

The government is working to draft new oil development contract terms that may allow international partners to book reserves in the country in an attempt to attract longer-term partners, according to Mehdi Hosseini, an adviser to Zanganeh. The contracts will bring Iran closer to international norms, Hosseini said in an interview Nov. 6.

Iran’s existing buy-back contracts require companies to pay for exploration and recover their investments from production at a pre-arranged rate of return. The ability to book reserves allows international oil companies to show they can replace crude already pumped with new barrels.

Iran’s oil reserves of 157 billion barrels are the world’s fourth-largest, and it holds the biggest gas reserves, estimated at 1,187 trillion cubic feet, according to BP’s Statistical Review. The nation has dropped to sixth place from second in OPEC, data compiled by Bloomberg show.

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Iran plans to meet international oil companies as soon as March to try to entice investors to its energy industry once world powers lift sanctions, the Islamic republic's oil minister said.
Wednesday, 04 December 2013 09:23 AM
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