$185b Oil, Gas Projects Eyed
Following the signature of historic nuclear accord between Iran and six world powers, Iran is poised to return to the international community. The country’s economic opportunities have already won hearts and minds. Less than a week after the signature of the deal, German minister of economy led a high-ranking business delegation to Tehran to clear the way for economic and industrial cooperation between the two countries once sanctions are removed.
Economic delegations from Italy, France, Spain, Turkey, India and Poland are also scheduled to visit Tehran soon.
Iranian officials, accompanied by chief executives of 70 Iranian companies, attended a two-day Iran-Europe conference in Vienna on July 23 and July 24. Officials and industrialists from Austria, France, England, Germany and other European countries were present.
The senior Iranian officials who attended the conference were Mohammad-Reza Nematzadeh, the minister of industry, mine and trade, Mohammad Khazaee, a deputy minister of economy and finance, Akbar Komeijani, a deputy governor of Central Bank of Iran, and Amir-Hossein Zamani-Nia, the deputy minister of petroleum for international affairs.
Attraction of foreign investment, finance of projects, transfer of state-of-the-art technology and marketing of products were among the main topics of discussion between Iranian and European officials and industrialists.
Iran, a New Market
Iran outlined plans to rebuild its main industries and trade relationships following a nuclear agreement with world powers, saying it was targeting oil and gas projects worth $185 billion by 2020.
Nematzadeh said the Islamic Republic would focus on its oil and gas, metals and car industries with an eye to exporting to Europe after sanctions have been lifted, rather than simply importing Western technology.
"We are looking for a two-way trade as well as cooperation in development, design and engineering," Nematzadeh said.
"We are no longer interested in a unidirectional importation of goods and machinery from Europe," he said.
The minister said Iran plans to produce three million cars by 2025, one-third of which would be exported.
He said Iran plans to manufacture a car to be endorsed by international brands, adding that the country is looking for joint investment with car parts manufacturers.
Nematzadeh said Iran aimed to join the World Trade Organization once political obstacles were removed and would be interested in trade deals with Europe and central Asian countries.
$2b Projects Finalized
Khazaee said Iran had already completed negotiations with some European companies wanting to invest in the country.
"We are recently witnessing the return of European investors to the country. Some of these negotiations have concluded, and we have approved and granted them the foreign investment licenses and protections," Khazaei told the conference.
"Even in the past couple of weeks we have approved more than $2 billion of projects in Iran by European companies," he said, without naming the firms or providing further details.
Most European oil majors and oil service companies have so far expressed caution about the prospects of a windfall of deals in Iran, saying their compliance departments will want to first see sanctions being fully removed before any meaningful work can start on projects.
50 Projects
Zamani-Nia said Iran had identified nearly 50 oil and gas projects worth $185 billion that it hoped to sign by 2020.
In preparation for negotiations with possible foreign partners, he said Iran had defined a new model contract which it calls its integrated petroleum contract (IPC).
"This model contract addresses some of the deficiencies of the old buyback contract and it further aligns the short- and long-term interests of parties involved," Zamani-Nia said.
He said the deals would last 20-25 years - much longer than the previously less popular buybacks, which effectively were fee paying deals with global oil majors such as France's Total for services they performed on Iranian oil fields.
He said Iran would introduce the projects it has identified and the new contract model within 2-3 months.
For his part, Komeijani said Iran’s financial sector was offering opportunities for cooperation between domestic banks and foreign investors.
Petchem Sector
Petrochemical sector is among the most important sectors of Iran’s petroleum industry. It has always been attractive to foreign investors. A delegation led by a deputy head of National Petrochemical Company (NPC) attended the Vienna event.
Iran’s petrochemical sector would need between $70b and $80b in investment in order to be able to double its annual production to 120 million tons.
Addressing the conference, Issa Mashayekhi, managing-director of Petrochemical Commercial Company International’s (PCCI), said the first positive signals were received from outside borders after an interim deal reached between Iran and the six powers in late 2013.
He said that the recent endorsement of the Joint Comprehensive Plan of Action (JCPOA) at the United Nations Security Council would have positive psychological effects.
Poland Rushes for Investment in Iran
Polish Economy Minister Janusz Piechociński is to visit Iran in September along with a group of businesspeople, as part of Poland’s efforts to tap into the lucrative Iranian market.
“Our offer [to Iran] will rival those of our European partners,” Piechociński told a press conference, noting that Poland will have to compete with countries such as Germany to enter the market. The minister announced that 50-60 representatives of Polish firms will go with him on an economic mission as part of the recently announced Go Iran program.
The end of sanctions on the country is expected to be an opportunity for trade, in particular for Polish farmers.
During the visit, Piechociński will take part in a Polish-Iranian Business Forum in Tehran and will sign an agreement to create a joint Polish-Iranian committee as a forum for regular future economic contacts and consultations.
Due to economic sanctions in 2014 Polish exports to Iran amounted to just 34.9 million euros, while imports from Iran were worth 22.4 million euros.