Iran eyes $185bn oil and gas projects after sanctions

Iran on Thursday outlined plans to rebuild its main industries and trade relationships following a nuclear agreement with world powers, saying it was targeting oil and gas projects worth $185bn by 2020.

Iran’s Minister of Industry, Mines and Trade Mohammad Reza Nematzadeh said the Islamic Republic would focus on its oil and gas, metals and car industries with an eye to exporting to Europe after sanctions have been lifted, rather than simply importing Western technology.

“We are looking for a two-way trade as well as cooperation in development, design and engineering,” Nematzadeh told a conference in Vienna.

“We are no longer interested in a unidirectional importation of goods and machinery from Europe,” he said.

The United Nations Security Council on Monday endorsed a deal to end years of economic sanctions on Iran in return for curbs on its nuclear programme.

Sanctions are unlikely to be removed until next year, as the deal requires approval by the U.S. Congress. Nuclear inspectors must also confirm that Iran is complying with the deal.

While the Iranian and U.S. presidents have been promoting the accord, hardliners in Tehran and Washington have spoken out strongly against it.

Many European companies have already shown interest in reestablishing business in Iran, with Germany sending its economy minister Sigmar Gabriel on the first top level government visit to Tehran in 13 years together with a delegation of leading business figures.

Iran’s deputy oil minister for commerce and international affairs, Hossein Zamaninia, said Tehran had identified nearly 50 oil and gas projects worth $185 billion that it hoped to sign by 2020. OPEC-member Iran has the world’s largest gas reserves and is fourth on the global list of top oil reserves holders.

NEW, LONGER CONTRACTS

In preparation for negotiations with possible foreign partners, Zamaninia said Iran had defined a new model contract which it calls its integrated petroleum contract (IPC).

“This model contract addresses some of the deficiencies of the old buyback contract and it further aligns the short- and long-term interests of parties involved,” he said.

He said the deals would last 20-25 years – much longer than the previously less popular buybacks, which effectively were fee paying deals with global oil majors such as France’s Total for services they performed on Iranian oil fields.

He said Iran would introduce the projects it has identified and the new contract model within 2-3 months.

Deputy Economy Minister Mohammad Khazaei said Iran had already completed negotiations with some European companies wanting to invest in the country.

“We are recently witnessing the return of European investors to the country. Some of these negotiations have concluded, and we have approved and granted them the foreign investment licences and protections,” Khazaei told the conference.

“Even in the past couple of weeks we have approved more than $2 billion of projects in Iran by European companies,” he said, without naming the firms or providing further details.

Most European oil majors and oil service companies have so far expressed caution about the prospects of a windfall of deals in Iran, saying their compliance departments will want to first see sanctions being fully removed before any meaningful work can start on projects.

Beyond oil, Nematzadeh said Iran was looking to move away from state ownership in many sectors, creating joint ventures for auto parts manufacturers with the aim to produce 3 million vehicles by 2025, of which a third would be exported.

Central bank deputy governor Akbar Komijani said Iran’s financial sector was offering opportunities for cooperation between domestic banks and foreign investors.

Nematzadeh said Iran aimed to join the World Trade Organization once political obstacles were removed and would be interested in trade deals with Europe and central Asian countries.