Baku, Azerbaijan, Jan. 21
By Saeed Isayev - Trend:
Iran has great oil and gas resources, therefore Western and indeed all international companies do not want to lose the opportunity to do business with Iran, professor of economics at U.S. Northeastern University, Kamran Dadkhah told Trend.
"This is of course, if the country's nuclear issue is resolved and sanctions are lifted," he added.
Iran and the P5+1 group on Jan. 20 have started to implement an agreement that was reached on Nov. 24, 2013, regarding Iran's nuclear program. While Iran has agreed to significantly cut down its uranium enrichment, while in return it would be getting a relief from sanctions for a six-month period.
According to BP statistics, Iran holds world's largest gas reserves, while being 4th in terms of proven oil reserves.
Kamran Dadkhah said that given the uncertainty about a final deal between P5+1 and Iran, many companies do not want to reach a definite deal with Iran.
He further said that in addition to the nuclear dispute and sanctions, the Iranian laws and it business environment are obstacles to foreign investment in oil and gas sectors.
"To begin with, the buy-back arrangement for investment in oil is unacceptable to oil companies," he said. "Under this arrangement a company invests in a field but does not own the field or the petroleum. But as the production starts the company receives a portion of the output as compensation for its investment and its return. The companies would like to own the field or at least the extracted petroleum."
"It seems that the current oil minister, Mr. Zangeneh is open to such deals," Dadkhah said.
On Jan. 17, Iran's oil minister Bijan Namdar Zanganeh has formally invited giant British oil companies, Royal Dutch Shell and British Petroleum, to take part in the country's oil and gas projects.
On Dec. 4, 2013 Iran named seven Western oil companies (Total of France, Royal Dutch Shell, Italy's ENI, Norway's Statoil, Britain's BP and U.S. companies Exxon Mobil and ConocoPhillips) it wants back in its vast oil and gas fields if international sanctions are lifted and said it would outline investment terms in April of 2014.
Kamran Dadkhah said that according to the Heritage Foundation, in terms of economic freedom Iran ranks 173 among 178 countries ranked.
"Aside from the eight countries not ranked, only Eritrea, Venezuela, Zimbabwe, Cuba, and North Korea are worse than Iran. Thus, the oil companies can only be cautiously optimistic," he said. "They don't want to be left behind so they sent representatives to Kish energy exhibition held in early January."
"On the other hand, they won't make any serious commitments until the sanctions are lifted, terms of participation clarified, and they are assured of the safety of investment and non-intervention by the IRGC," he underscored.
On Jan. 20, the EU has agreed to suspend some economic sanctions against Iran as part of a ground-breaking nuclear deal under which Tehran has scaled back its nuclear work. The decision included softening restrictions on trade in petrochemicals and precious metals and on the provision of insurance for oil shipments, among other measures.
The same day, Reuters reported citing the U.S. Treasury Department that the country eased some sanctions on Iran, pausing efforts to reduce Iranian crude oil exports, as part of a nuclear deal.
The Treasury Department said that now that Iran has fulfilled its initial nuclear commitments under the deal, "the administration has taken the necessary steps to pause efforts to further reduce Iranian crude oil exports."
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