Iran is preparing more than 15 major oil and gas projects involving a "new method" to attract local and foreign investment, the head of Iran's state-owned energy firm told state radio on Monday. It was not clear if the "new method" meant a revision of Iran's "buy-back" terms for oil and gas deals which have been unpopular with foreign investors in the past.
The move comes as many particularly Western firms are reviewing investment plans in Iran or quitting because of a dispute with the West over the Islamic Republic's nuclear plans. "The Islamic Republic of Iran will henceforth present its oil and gas projects using a new method to domestic and international investors," Seifollah Jashnsaz, managing director of the National Iranian Oil Company (NIOC), told state radio.
Under so-called buy-backs, companies hand over operations of fields to NIOC after development and then receive payment from oil or gas production for a few years to cover their investment. Foreign firms regularly complain that the terms are not generous enough, and some say they lose money on the deals.
Oil officials were not immediately available to explain details of the "new method." "We will prepare project packages ready to be introduced and submitted to international financial markets," Jashnsaz said. "Each one of these packages is a major project and there are more than 15, so that we can attract foreign partners and new financial resources. We received a good reception in this respect from both European and Asian companies," he said.
He said that, of more than 15 projects, 10 would be put out to tender before the close of the Iranian year, which ends in March 2009. Iran, with the world's fourth largest oil output, produces more than 4 million barrels of crude a day. But analysts say it needs the foreign technology, if not cash, to expand output.
StatoilHydro, which announced on Friday it would not make any further investments in Iran, is the latest in a series of foreign firms to back away from the Islamic Republic as perceived risk to investors has grown.
France's Total said earlier this year it would spend no more money on Iranian gas projects for now. But it reaffirmed that Iran remains a priority country for the company. Royal Dutch Shell has scrapped investments in Iran.
Asian firms, including from Russia and China, have however signed up to new projects in the past year or have been looking at expanding their exposure to Iran, which sits on the world's second-largest reserves of both oil and gas. Iran has benefited from windfall oil earnings as oil prices have soared to record levels this year. Iranian officials have in the past said it has both the cash and expertise to handle projects on its own if foreigners are not interested.
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