Foreign oil companies hoping to invest in Iran as sanctions are relaxed won’t be able to count Iranian reserves among their assets under the draft terms of new contracts, a senior Iranian oil and gas industry official said.
But overseas oil companies may be allowed to wholly own Iranian oil services companies as part of the country’s privatization program, Ali Kardor, vice president for finance and investment at the state-owned National Iranian Oil Co., said in an interview. Mr. Kardor also said Iran hopes eventually to partner with oil giants like Total SA in joint ventures elsewhere in the world.
An interim deal with Western governments over Iran’s nuclear program last November has raised hopes sanctions on investing in Iran’s oil sector could soon be lifted. Executives from European Union oil companies that had previously pulled out of Iran have been visiting the capital Tehran in recent weeks to study a possible return.
Iran is planning to present final versions of its new oil contracts in July and will launch tenders soon afterwards. Foreign companies will be allowed to account for prospective revenues based on these contracts, which will span 20 to 25 years, Mr. Kardor said.
“You [foreign oil companies] can report” future revenue for valuation purposes but “you can’t book” reserves, he said.
The ability to book reserves—an important valuation metric for oil companies—has been a key demand from Western companies looking to enter Iran. Under a draft version of the contracts currently being studied, foreign companies would receive higher fees per barrel, paid in oil, for taking on riskier projects, such as developing so-called ‘heavy’ oil or in difficult areas like the Caspian Sea.
Still, Iran could sweeten some of its investment terms to attract to Western investors to its oil sector.
Mr. Kardor said foreign companies would be able to buy state-owned oil services companies after they are privatized by the government through the Iranian stock market over the coming three years. Foreign companies “can have a 100% share,” Mr. Kardor said.
Petropars and PetroIran are among the companies expected to be privatized, as well as National Iranian Drilling Co., which he said could be worth $3 billion.
Mr. Kardor said Iran would be eager to expand its oil interests overseas as sanctions are relaxed.
“It isn’t [just about] companies coming to Iran for our reserves,” he said. “On the other side, we are keen for joint ventures upstream [on] the international market,” he said.
Mr. Kardor said Iranian oil officials had discussed potential joint ventures with France’s Total SA, Italy’s Eni SpA, Norway’s Statoil ASA and Gazprom and Lukoil of Russia, among others. He said Iran would like to enter Total’s Iraqi Kurdish acreage or its Asian liquefied-natural-gas terminals, or partner with Lukoil and Gazprom in China or Africa.
Statoil said it has no presence in Iran but declined to comment further. Eni said it wouldn’t invest in Iran while international sanctions remain, but didn’t comment further. The other companies didn’t respond to requests for comment – reported http://online.wsj.com.
