By Ajay Makan– January 22, 2014
Hassan Rouhani, Iran’s president, has asked a group of western oil majors to detail the conditions under which they would return to the country, as Tehran continues its drive to win back international business amid a thaw in sanctions.
In a closed-door meeting including BP, Eni, Royal Dutch Shell and Total on the sidelines of the World Economic Forum in Davos, Mr Rouhani and his oil minister Bijan Zangeneh told executives to submit contracts they would like to see Iran adopt.
US companies declined to attend but one other person who did was Khalid al-Falih, chief executive of Saudi Aramco, the state oil company of regional rival Saudi Arabia, which has been nervously watching Tehran’s rapprochement with the west.
Iran is desperate to revive its oil industry and boost lucrative exports, after crude production slumped by 1m barrels a day to around 2.7m b/d under the weight of international sanctions imposed against its nuclear programme in 2012.
Iranian officials plan further meetings with oil companies in London during the summer, before proposing a final contract in September.
“The very fact that the president of Iran chose to spend an hour with us shows how interested he is in attracting international oil companies into the country,” said Paolo Scaroni, chief executive of ENI.
Mr Rouhani said he wanted to see international companies work on new projects, including the development of the giant South Pars gasfield which Iran shares with Qatar, but has struggled to develop, according to Mr Scaroni.
The president said he was willing to abandon Iran’s buyback contracts, which are disliked by western groups. International companies are keen on contracts that reward them for growing production and provide compensation for unexpected cost overruns.
He also said he wanted help to boost production at existing sites including the Azadegan field. International companies will also be offered the opportunity to participate in gas infrastructure projects, including liquefied natural gas terminals and a possible gas to liquids project.
Chinese state oil companies, which currently dominate international operations in Iran, were absent, however, suggesting the emphasis was on bringing in fresh expertise.