Iran lures foreign investors with new oil contracts

“We do not claim that this is an ideal and flawless scheme, but it can address the needs of both National Iranian Oil Co. and global oil companies”, Bijan Namdar Zanganeh, Iran’s oil minister, told the Financial Times.

He made the remarks on Saturday, on the sideline of a ceremony to unveil new oil contracts in Tehran.

Total SA, Royal Dutch Shell Plc and Lukoil PJSC are among worldwide companies that have selected oil and natural gas deposits to develop in Iran as the holder of the world’s fourth-largest crude reserves presents $30 billion worth of projects to investors.

Iran plans to boost oil production to 5.7 million barrels a day and gas output to 1.4 billion cubic meters a day by 2021. They must also partner with local companies in joint ventures, an transfer technology.

The new program will allow foreign businesses to be involved in developing fields, then collecting profits for up to 20 years, which can be extended for five more years.

Iranian hardliners, however, condemned the new contracts as “unconstitutional”, saying they will open the way for “infiltration” of the energy sector by Iran’s enemies.

Besides the ongoing meeting, another conference is scheduled to be held in the British capital of London on February 22 to 24, 2016 to introduce Iran’s attractive oil contract models to European investors. “The way for the presence of these companies in Iran’s oil industry is open”, he said.

Worldwide companies withdrew from Iran as the United States and European Union imposed sanctions on Iran’s oil and gas industries during the past few years, which caused a significant decrease in Iran’s oil and gas exports and production.

“We are interested to come back to Iran when the sanctions are lifted and if the contracts are interesting”, Stephane Michel, Total’s head of exploration and production in the Middle East said at the conference.

“We need to look at what was presented to better understand how it’s going to work and to make up our mind”, he said.

“All banking and economic sanctions will be lifted by the 1st week of January”, Amir Hossein Zamaninia, deputy oil minister for worldwide and commerce affairs, said Saturday.

Despite low crude prices Iran is intent on reclaiming lost market share and has pledged to increase output by 500,000 bpd once sanctions are lifted, independent of OPEC guidance.

Iran produces about 2.8 million barrels of oil per day, compared to 4.0 million bpd in 2011, following U.S. and other Western pressure on buyers to steer clear of the country.