Iran to reform oil contracts


Reuters Davos, Switzerland

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Iran's President Hassan Rouhani (right) shakes hands with World Economic Forum founder and executive chairman Klaus Schwab at the forum's annual meeting in Davos yesterday. Photo: Reuters

Iran would have a new, attractive investment model for oil contracts by September, its president and oil minister told some of the world’s top oil executives in Davos yesterday, as part of its drive to win back Western business.

Iranian President Hassan Rouhani and Oil Minister Bijan Zanganeh stressed the importance of fossil fuel, with global energy demand rising, executives who attended the meeting said.

The two Iranians also said their new administration was keen to open up to Western investments and technology.

“The fact that the president of Iran came to the meeting today… is clearly a sign that Iran wants to open up to international oil companies,” said Paolo Scaroni, the chief executive of Italy’s Eni, who was at the meeting.

“It was an impressive presentation,” said one of three further oil executives who were at the meeting and spoke on condition of anonymity.

“They said they are working on a new model to work with investors and are happy to see us. They not only need money but technologies.

“They are happy to have consultations about how new contracts shall work. They want to decide on the model by September,” he said.

The heads of oil majors Eni, Total, BP, Lukoil, GazpromNeft and several other companies were present, as well as a former head of Royal Dutch Shell.

It was not clear if the meeting, which was held behind closed doors amid tight security, was attended by US oil executives from firms such as Exxon Mobil or Chevron.

Tehran has already said it wants Western oil firms to revive its giant ageing oilfields and develop new oil and gas fields once sanctions are lifted.

“The best way for companies like us to go back to Iran is to follow strictly the sanctions and push both parties to reach an agreement which will lead to the lifting of sanctions one day,” Scaroni said.

“I made it clear some time ago I’m not going back to Iran under old contract terms even if all sanctions are lifted.”

The major Opec producer has started implementing a nuclear deal with world powers, a step towards a broad settlement which could lead to the end of sanctions.

Western sanctions imposed in 2012 on Iran for its nuclear energy programme have choked Tehran’s oil production – output is down by 1 million barrels a day since the start of 2012 to 2.7 million barrels a day – and lost it billions in oil revenue.

Top Iranian officials say it can raise production to 4 million barrels a day within six months of sanctions being lifted. Western experts are more conservative, saying 3 million to 3.5 million barrels a day is more likely.

Two executives present at the meeting said they would certainly look at the new contracts and consider investing.

One said he was having no discussions with Iran at the moment and opportunities were abundant elsewhere.

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