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Iran’s Rouhani invites oil companies to invest as sanctions end

BY BRIAN SWINT and ZIJING WU

DAVOS, Switzerland (Bloomberg) -- Hassan Rouhani, the first Iranian leader in a decade to visit Davos for the World Economic Forum, invited oil companies to invest in his country as years of sanctions are about to be lifted.

Rouhani told a meeting of about 30 executives, mostly from the oil industry, that Iran has a good investment environment now and that risk is low, said Lin Boqiang, director of China Center for Energy Economics Research, who attended the meeting.

Iran, holder of the world’s fourth-largest proven oil reserves, saw its economy shrink more than 5 percent in the fiscal year through March under the weight of international sanctions. Some of those restrictions and capital controls imposed on Iran because of its nuclear program are due to be lifted after a Nov. 24 accord was agreed upon in Geneva.

Christophe de Margerie, CEO of Total SA, said yesterday he sees potential for the French oil producer to return to work in Iran after halting development of the South Pars gas field in 2009. Eni SpA chairman Giuseppe Recchi said yesterday he’s interested in seeing Iran open up.

Total, based in Paris, has an “old relationship” with Iran, De Margerie said.

“It is true we know them maybe a little bit more than others,” he said yesterday. “You cannot say Total has more interest than Chevron or Exxon or whatever,” de Margerie said, referring to the biggest U.S. oil companies. “What is more important is when can we really have negotiation.” The time is “still not right but it’s a potential.”

Iran has postponed a conference in London at which it plans to introduce new contract terms to international energy companies to give itself more time to prepare, said Mehdi Hosseini, an adviser to Oil Minister Bijan Namdar Zanganeh.

Iran’s existing buy-back contracts require companies to pay for oil and natural gas exploration and recover their investment from any production at a pre-arranged rate of return. Hosseini said in November that the nation was working on new terms that conform more closely with international norms to attract foreign partners to help develop energy resources.

Rouhani said he would push for a final agreement with world powers over the nation’s nuclear program in a speech in Davos today.

01/23/2014

 

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