Iran on Wednesday named seven Western oil companies it wants back in its vast oil and gas fields if international sanctions are lifted and said it would outline investment terms in April next year.
Iranian Oil Minister Bijan Zanganeh named the seven in order: Total of France, Royal Dutch Shell, Italy’s ENI, Norway’s Statoil, Britain’s BP and U.S. companies Exxon Mobil and ConocoPhillips.
Iran has the world’s fourth-largest proved national reserves of oil - most of it cheap to produce - and is home to the biggest proved reserves of natural gas, some 18 percent of the global total.
With nationalization in the Islamic revolution of 1979, the oil companies were thrown out and Iran’s share of world oil production fell to below 40 percent by 1997 from 55 percent in the 1970s. They drifted back in the 1990s, and Zanganeh oversaw that return as minister in a reformist government of 1997-2005.
Total moved back into onshore fields in 1997 and Shell in 1999, both while Zanganeh was minister, and both in defiance of U.S. sanctions. President Bill Clinton had blocked a Conoco project in 1995.
But Iran’s production stagnated through the 2000s amid growing international tensions over its nuclear programme. The more effective sanctions instituted in 2012 have choked out foreign investment and sent output down to 2.65 million barrels a day in November from an average of 4.3 million in 2011.
Iran reached an interim deal last month with six western powers to limit its nuclear program, under which sanctions on oil investment and trade with Iran may be eased next year - although for now the agreement does not explicitly include a relaxation of the controls on Iranian oil sales.
European talks first
Speaking to reporters at an OPEC meeting, Zanganeh said he was already talking with some companies, although so far not those from the United States.
“We had no limitations for U.S. companies. Twenty years ago there were limitations against them from their own administration. For doing projects in Iran, we have no limitations,” Zanganeh said.
He is due to meet senior executives from Western oil companies including Eni and Shell on Thursday, an Iranian oil official said.
Zanganeh made no mention of Russian, Chinese or Japanese companies or those of other nationalities. Asked whether he would like to see Asian, Indian or Chinese companies coming to Iran as well, he said: “Yes, but now we are discussing with European [firms].”
He said contract terms would be better than those in post-war Iraq, which limited oil companies to operating fees rather than the share of production deals they prefer.
“I cannot say more about the detail,” Zanganeh said.
Mehdi Hosseini, an Iranian official in charge of revising national investment terms, told Reuters he hoped to be able to introduce the new contract model at a London conference in the second week of April.
“The Iranians aren’t under any illusions that they can draw anyone in before the sanctions are lifted,” said a Western oil executive from a company previously involved in Iran. “And most international oil companies will be careful not to go one step too far before a final agreement is reached between Iran and the West.”
A Western oil source from another company that had invested in Iran said, “A removal of sanctions that would allow for tangible progress for international oil companies is still at the minimum 18-24 months away.”
The love-hate, on-off relationship between Iran and foreigners intent on exploiting its oil dates back long before the revolution of 1979, and BP, perhaps the most badly scarred by its past experiences there, was being cautious about the prospects for a new era of co-operation on Wednesday.
“Iran has not had access to a lot of recent technological developments,” said a spokesman. “It clearly has a lot of potential. However as this is likely to be a very complicated political process we need to take our time and watch the situation carefully.”
Over a hundred years ago, BP was called the Anglo-Persian Oil Company, and later the Anglo-Iranian Oil Company - with both names reflecting the importance of Iranian oil to what was then a state-owned British group. When nationalization came, BP lost 40 percent of its production.
Christophe de Margerie, the chief executive of Total, which has been closer to the post-1979 regime than most, refused to take questions about Iran at a conference in Paris on Wednesday.
Eni has never interrupted relations with Iran, having won some exemptions from the 2012 sanctions so that the country’s debt to it of around $1 billion could be repayed in oil production. Chief Executive Paolo Scaroni recently said the group must be ready to re-enter when the situation unlocks.
Shell, Exxon and Conoco all declined to comment on Wednesday.SHOW MORE