Companies not rushing to Iran, and there are reasons why
Baku, Azerbaijan, Jan. 19
By Aygun Badalova - Trend:
Iran needs plenty of investment money to restore its oil infrastructure, but it is yet to be seen if it is hospitable enough to attract investments, Gal Luft, co-director of the Institute for the Analysis of Global Security (IAGS), a Washington based think tank focused on energy security, and a senior adviser to the United States Energy Security Council told Trend.
"At today's price, companies don't have as much money to spare and they prefer to go to places that are safe and stable. I don't see them rushing to Iran," Luft said.
"Iran is not a terribly convenient place to do business as they have been isolated from financial markets for too long," he added.
The international sanctions imposed on Iran with regard to its nuclear program have been removed as the Joint Comprehensive Plan of Action (JCPOA, aka nuclear deal) entered the implementation phase on Jan. 16.
Iranian officials have repeatedly announced that Tehran will increase its current oil export of one million barrels per day by 500,000 barrels as soon as sanctions are removed. The figure is planed to increase by another 500,000 to two million barrels per day within a six month period at the next step. Iran's current oil production is estimated to be around 2.8 million barrels per day (mbpd), of which about one million barrels are exported.
Iran's top oil officials have been holding meetings with industry executives for months and in December the oil ministry unveiled the outline of new contracts aimed at attracting the billions of dollars it needs to rehabilitate its neglected oil and gas infrastructure.
Luft believes that the best bellwether will be China's president Xi Jinping's visit to Iran in the next few days.
"This will indicate how eager China is in investing in Iran. If China is lukewarm than it is likely that the rest of the world will be even less inclined," he said.
Chinese President Xi Jinping will visit Iran on January 22. The upcoming visit will be the first visit of Chinese president to Iran in 14 years.
The Chinese president reportedly will arrive in Iran heading a big delegation of political and economic representatives. The visit will last for two days.