The Islamic Republic is extremely eager to attract foreign investment to its oilfields as soon as sanctions are lifted, but many believe Iran will remain a pariah even if sanctions are no longer banning investment.
Iran has written a new contract template meant to be more appealing than the one it previously used. And it is boasting that foreign firms are pounding at its door. But there is little hard evidence of that.
One Western diplomatic source told Reuters the interest in oil dialogue with foreign companies was “one-sided and mostly coming from Iran’s side.”
“Iran is looking a lot less interesting and desirable from the perspective of Western oil companies. There’s too much oil on the market, so the last thing they want is for Iran to come back on-line,” that source said.
Another Western diplomatic source told Reuters: “There are still great doubts on profitability at the moment given the lack of direct access to fields in Iran. It is unlikely that any oil company—in the current uncertain environment—would sign even an open contract. It is very much wait and see.”
Iran has said its goal is to attract more than $40 billion in foreign investment soon after sanctions are lifted.
The Oil Ministry has reportedly showed the new contract matrix to some major oil firms, though no one admits to seeing it.
It has planned a big event to release the contract at a conference in London. But that conference has been repeatedly postponed as the nuclear talks have been extended.
Mehdi Varzi, previously an official at the National Iranian Oil Co. (NIOC), told Reuters discussions with foreign oil firms had been “on and off for some time.” He said Iran would have to offer more attractive incentives to get the ball rolling.
“With the current situation, even if sanctions are lifted, I cannot see many companies going to Iran,” said Varzi, who now runs an energy consultancy in Britain.
He said Iran’s energy sector would be in deep trouble if market conditions deteriorate further. “If things get worse, the survival of the Iranian oil and gas industry is at stake.”