Iran Is Preparing Its ‘Opening Up’ Following The Nuclear Accord With UN World Powers
$OIL, $TAT
Thursday, Iran announced its plans to rebuild its Key industries and trade relationships following a nuclear agreement with UN world powers, saying it is targeting Crude Oil and Nat Gas projects worth $185-B by Y 2020.
Iran’s Minister of Industry, Mines and Trade Mohammad Reza Nematzadeh said the nation will focus on its Oil & Gas, metals and car industries with an eye to exporting to Europe after sanctions have been lifted, and not just import Western technology.
“We are looking for a 2-way trade as well as cooperation in development, design and engineering,” Mr. Nematzadeh told a conference in Vienna, Austria. “We are no longer interested in a unidirectional importation of goods and machinery from Europe,” he said.
The United Nations Security Council Monday endorsed an accord to end years of economic sanctions on Iran in return for curbs on its nuclear program.
Sanctions are unlikely to be removed until Y 2016, as the deal requires approval by the US Congress. Also, nuclear inspectors must confirm that Iran is complying with the terms of the agreement.
While the Iranian and US presidents are promoting the accord, hardliners in both Tehran and Washington are speaking out strongly against it.
Many European companies have already shown interest in reestablishing business in Iran. Germany sending its economy minister Sigmar Gabriel on the 1st top level government visit to Tehran in 13 yrs 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 & Gas projects worth $185-B that it hopes to sign by Y 2020.
OPEC-member Iran has the world’s largest Nat Gas reserves and is 4th on the global list of top Crude Oil reserves holders.
In preparation for negotiations with possible foreign partners, Mr. 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 yrs – much longer than the previously less popular buybacks, which effectively were fee paying deals with global Oil majors such as France’s Total (NYSE:TAT) 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,” Mr. Khazaei told the conference.
“Even in the past couple of weeks we have approved more than $2-B 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 1st see sanctions being fully removed before any meaningful work can start on projects.
Beyond Crude Oil, Mr. 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-M vehicles by Y 2025, of which a 33% 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.
Mr. Nematzadeh said Iran will join the World Trade Organization (WTO) once political obstacles were removed and is interested in trade deals with Europe and central Asian countries.
Stay tuned…
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Paul Ebeling
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