Iran adopts new policies to bring back U.S. and European investors to energy projects

Business Materials 6 November 2013 19:43 (UTC +04:00)

Baku, Azerbaijan, Nov. 6

By Fatih Karimov - Trend: The administration of Iranian President Hassan Rouhani has adopted new policies to bring U.S. and European companies back to the country's energy projects, the Mehr News Agency quoted the president's chief of staff Mohammad Nahavandian as saying.

Considering political and diplomatic developments in the administration, we will see the return of large international companies to Iran's energy sector, he said.

Western-led sanctions have negatively affected the country's economic and technical capabilities, he said, adding that new opportunities have been created for restoring relations with the global community.

Iran is in dire need of money and financial resources and can't afford to pay the expenses of giant projects in the energy sector, so it needs money from domestic and foreign private companies to carry out the projects.

Iran's oil and oil products exports, which account for over 80 per cent of the country's total exports, have faced a falling trend in the past two years. The country's oil exports were around 2.2 million barrels per day in 2011 but the figure has fallen to below one million barrels.

Due to sanctions against the country, Tehran is not able to receive its oil revenues in any currency. Therefore, it can just import legal goods from the destination country in exchange for oil.

Several oil and gas projects in Iran have been halted (or their progress is slow) due to financial problems or lack of technology. The projects' expenses have increased sharply, as well.

For example, in the absence of foreign companies, it was estimated that phases 11 to 24 of the giant South Pars gas field will come on stream at a cost of $40 billion. But some $46 billion have been invested in the project so far while none of the phases are complete yet.

According to the former Iranian Oil Minister Rostam Qasemi, another $30 billion should be invested in the project. Iran's oil projects are suffering the same problems as well.