Plan to Reinvest 3% of Oil, Gas Revenues

Plan to Reinvest 3% of Oil, Gas RevenuesPlan to Reinvest 3% of Oil, Gas Revenues

The parliament is considering a bill that will require the government to earmark a fraction of its revenues from crude oil and natural gas exports for the development of economic and energy infrastructures and less-developed areas.

The proposed legislation targets 3% of the government's total oil and gas revenues by reinvesting 1% of the sum in oil and gas producing cities based on their production level and 2% in construction projects in deprived and disadvantaged areas.

The underdeveloped regions will receive the investment based on a ranking by the Management and Planning Organization of Iran, ISNA reported.

The new incentive is an additional impetus for growth in the corresponding areas and does not detract from their annual budget.

Iran is in dire need of investing billions of dollars in its aging oil and gas production facilities to uplift its ailing economy on the back of years of sanctions and underinvestment.

Unsurprisingly, the country is taking steps to shore up investment in its most fundamental industry on its own without relying on foreign investment.

The collapse of oil prices put a huge dent in Iran's state budget for the current Iranian year that ends March 2017.

Despite the sharp fall of oil from above $100 per barrel in 2014 to below $30 in January—its lowest level in more than a decade—oil is still the most important commodity for the Persian Gulf country, making up around 25% of its total revenues in this year's budget.

International crude oil benchmark Brent is currently trading at around $45 a barrel.

OPEC's third-largest producer is equally pursuing plans to attract foreign investment in its oil and gas sector after it reached a historic nuclear agreement with six world powers on its nuclear program.

The deal came into force on January 16, allowing Iran to open gates to international companies. The country is planning to unveil more than 50 oil and gas projects for investment to international companies later this year.