Iran’s unpalatable contract demands, not sanctions, prompted it to halt investments in the Islamic Republic.
Total Chief Executive Officer Christophe de Margerie told reporters in New York Friday, “We will not invest in Iran. It is not because of embargoes but because the terms are not good.
“Instead of improving terms for investors, they [Iran] are becoming more aggressive. So the environment is not right…. We will keep our relationship with Iran at a technical level so we could be there someday….. The world will need Iran’s oil and gas.”
Many international oil executives have long complained of the difficulty of dealing with Iran and its repeated efforts to change the terms on contracts, but this was the first time a major oil executive stated baldly that Iran’s financial terms were too poor to warrant investment.
The issue is of historical interest now, however, as the EU sanctions issued a few weeks ago bar European firms like Total from any new investment in Iranian oil and gasfields.
Total had negotiated on and off for years, unsuccessfully, to close a multibillion-dollar deal to develop the South Pars gasfield.
On oil prices, de Margerie warned that prices above $100 would be bad news, and could have a bigger impact on the economy than is widely believed..
“Also $70 to $80 dollar barrel oil, to be honest, starts to look a little low to invest in difficult regions of the world; $70 is not enough,” he said.
Many OPEC ministers have said they believe a price between $70 and $90 a barrel is comfortable for consumers and sufficient to fund new production.