Call to Embrace Foreign Oil Technology, Investment

Call to Embrace Foreign Oil Technology, Investment Call to Embrace Foreign Oil Technology, Investment

Iran needs to turn to foreign technology and investment to accelerate the growth of its burgeoning oil industry and reignite its sanctions-hit economy, Iran's first deputy for OPEC affairs said in a statement.

Unshackled by western sanctions more than five months ago, Iran is targeting an annual economic growth of 8%, but the country "will not go past 4% if we stick to domestic [financial] resources", Mehran Amir-Moeini was also quoted as saying by ILNA on Wednesday.

"Our funds are limited and the oil industry requires huge investments. It also needs new technologies, thus the need to embrace foreign capital is undeniable," he said.

After the US and EU enforced more sanctions against Iran's nuclear program in 2011 and 2012, most European companies canned their projects in the country's industrial and oil sectors.

Tehran tried to fill the void mostly by turning to Chinese contractors, but strict financial and trade restrictions left it short of the investment and equipment it needed to drive the growth of its key oil industry.

"During the years of sanctions, we were deprived of advanced technologies. The main goal of investment is to couple finance with transfer of technology," said the official.

He stressed that foreign cooperation and investment in Iranian projects should not be interpreted as crossing out domestic potential.

"No one can deny the positive impact of foreign investment. There could be some ramifications, but we need to minimize the setbacks," he said.

One of the main concerns of some domestic groups regarding the reentry of international companies in Iran is the new model of oil and gas contracts pioneered under the auspices of President Hassan Rouhani's administration.

The government says foreign finance is key to develop the country's underlying oil industry that was dealt a financial blow during sanctions.

  Hurdles for Investment

Opponents of the new Iran Petroleum Contracts say the new framework would give too much control to foreign firms over Iran's hydrocarbon resources while domestic companies could be left out.

They have also called for maintaining a so-called buyback model dating back more than 20 years under which foreign firms have been banned from booking reserves or taking equity stakes in Iranian companies.

However, Amir-Moeini said the government should be given the leeway to ease the return of internationals as the country plans to significantly raise its crude production over the next few years.

"Sometimes we rob ourselves of technology … that we fail to bring in new technologies goes back to us, that means we couldn't properly handle the issue of technology transfer," the official said in a subtle reference to opponents of the contracts who equally push the government to clear the stumbling blocks against economic growth.

Sanctions cut Iran's oil output to around 2.5 million barrels a day, but Iran has almost fully reached its pre-sanctions production capacity of around 4 million bpd within five months of sanctions removal.

The country is planning to pump 5.8 million barrels of crude per day by 2021, the last year of its sixth five-year development plan, including 4.8 million barrels of heavy crude and 1 million barrels of condensate, a type of light, sweet crude extracted from its gas fields in the Persian Gulf.