Iran reveals plan for new investment model on oil contracts to win back Western business
Published 23/01/2014 | 16:27
Iran will have a new, attractive investment model for oil contracts by September, its president and oil minister told some of the world's top oil executives, as part of its drive to win back Western business.
Iranian President Hassan Rouhani and Oil Minister Bijan Zanganeh said their new administration was keen to open up to Western investments and technology, executives who attended the meeting said. They also stressed the importance of fossil fuel, with global energy demand rising.
"The fact that the president of Iran came to the meeting today... is clearly a sign that Iran wants to open up to international oil companies," said Paolo Scaroni, chief executive of Italy's Eni , who was at the meeting.
"It was an impressive presentation," said one of three further oil executives who were at the meeting and spoke with Reuters on condition of anonymity
"They said they are working on a new model to work with investors and are happy to see us," he added. "They not only need money but technologies. They are happy to have consultations about how new contracts shall work. They want to decide on the model by September."
"The message was - look at us, our geological risks are minimal, reserves are huge, come and we will create competitive terms and you will be happy. Your return on investments will be acceptable," another executive said.
Royal Dutch/Shell had said its new chief executive Ben van Beurden would not be there.
Tehran has already said it wants Western oil companies to revive its giant ageing oilfields and develop new oil and gas fields once sanctions are lifted.
"The best way for companies like us to go back to Iran is to follow strictly the sanctions and push both parties to reach an agreement which will lead to the lifting of sanctions one day," Scaroni said.
"I made it clear some time ago I'm not going back to Iran under old contract terms even if all sanctions are lifted."
Scaroni was the first Western CEO to meet publicly with Oil Minister Bijan Zanganeh, on the sidelines of a meeting of the Organization of the Petroleum Exporting Countries last month.
The major OPEC producer has started implementing a nuclear deal with world powers, a step towards a broad settlement which could lead to the end of sanctions.
Western sanctions imposed in 2012 on Iran for its nuclear program have choked Tehran's oil production - output is down a million barrels per day (bpd) since the start of 2012 to 2.7 million bpd - and lost it billions in oil revenue.
Top Iranian officials say it can raise production to 4 million bpd within six months of sanctions being lifted. Western experts are more conservative, saying 3 million to 3.5 million bpd is more likely.
Two executives present at the meeting said that they would certainly look at the new contracts and consider investing.
One said he was having no discussions with Iran at the moment and opportunities were abundant elsewhere.
"I was most impressed with the finance minister of Mexico, also talking to us today, about reforms they make to bring companies to share risks," he said.