Oil revenues should be invested in the critical science and petrochemical sectors, an MP from Abadan and a member of Majlis Energy Commission said on Saturday.
“Developing petrochemical and industrial infrastructures with the help of oil revenues can definitely encourage the private sector to invest in downstream industries, which would in turn lead to economic prosperity,” Gholamreza Sharafi was quoted as saying by ISNA.
According to the official, the substantial revenue will be wasted unless it is reasonably spent to expand manufacturing industries that can not only generate income but also create jobs.
Underscoring the fact that spending big budgets on producing low-value oil products cannot develop much-needed infrastructures, the official said, “Investing in the downstream petrochemical sector will yield a reasonable return, which explains why Majlis Energy Commission has urged the Oil Ministry to put such investment programs high on its agenda.”
The lawmaker highlighted the completion of the value chain and development of petrochemical downstream industries. He also called for expanding the industry in underdeveloped regions and conducting feasibility studies to establish supplementary industries with the aim of creating jobs and promoting economic prosperity.
Stressing that attracting domestic funds should be a top priority in the new oil contracts, known as Iran Petroleum Contract, Sharafi noted that in case domestic financial resources cannot meet investment needs, effective plans should be devised to attract foreign investments.
The parliament is reportedly 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 regions.
The underdeveloped regions will receive the investment based on a ranking compiled by the Management and Planning Organization of Iran.
The new incentive is expected to give an additional impetus for growth in the corresponding areas and does not detract from their annual budget.
Iran is in dire need of hefty investments in its aging oil and gas production facilities to uplift its ailing economy on the back of years of sanctions and underinvestment.
Tehran is sweetening the terms it offers via IPC to attract the interest of foreign investors deterred by low crude prices.
The new contracts, which include those in the upstream exploration and development sectors, are expected to attract more than $40 billion in foreign investment.
The downstream sector commonly refers to the refining of crude oil and the processing of raw natural gas, as well as the marketing and distribution of products derived from crude oil and natural gas.
Exploration and production enterprises are involved in high-risk/high-reward areas of exploration and production in the oil and gas sector.
