As reported in the Financial Times on Dec. 5th, Iran is increasing its efforts to attract important western oil groups. Although – due to U.S. and European imposed sanctions – western companies are not currently allowed to make new investments in Iran; recent negotiations regarding Iran’s nuclear program have sparked hopes that restrictions will be lifted leading to the opening up of what are considered some of the Middle East’s most tempting oil reserves.
Of the investors who have met with Bijan Zanganeh, Iran’s oil minister, is Eni’s Paolo Scaroni. The Italian oil group’s CEO discussed the possibility of new oil and gas projects as quoted by the Financial Times:
“We discussed specific projects that we had been looking at for many years before sanctions were imposed. We will use the next six months of negotiations to identify opportunities of common interest.”
As FT correspondent Ajay Makan mentions in his article, while Iran has opened direct contact with European oil companies, contact with their U.S. counterparts has been primarily indirect. However, Iran continues to court much needed investment for its oil industry, which has suffered a fall in production as a result of sanctions and a partial export ban.
Mr. Makan also reports that the Iranian government is reviewing its unpopular buyback contract agreements and Mr. Scaroni has indicated that Eni will not invest in any new contracts of this type but rather in those which will allow for increased production incentives and compensation for cost overruns. He also indicated that the two sides discussed payment for work Eni has done in Iran under existing contracts. Eni’s presence in Iran places the company in an advantageous position for any new projects in the future. “We consider ourselves to be a preferred international company in Iran, and the minister stated this very clearly,” said Mr. Scaroni, following the Vienna meeting with Mr. Zanganeh.
Meanwhile, Iran’s oil minister expressed a desire to see all of the West’s major oil groups back in the country; something that is now a distinct possibility if an agreement on Iran’s nuclear program can be reached over the next six months.