Iran will have to offer attractive terms to draw investment by international oil companies because the firms have become more risk-averse and focused on profitability, a senior executive of French oil company Total said.
A few years ago, oil majors were willing to accept tough contract terms and take bigger security risks to gain access to oil resources in countries such as Iraq, said Stephane Michel, Total's president of exploration and production in the Middle East.
Now, companies have new opportunities to exploit such as shale oil so they emphasize profitability more, while they have also become more disciplined about capital spending, Michel said in an interview with Reuters.
"The situation in 2015 has nothing to do with the situation in Iraq. At that time, there was some concern about access to resources," he said, referring to a series of deals signed by Iraq with Total and other oil majors in 2009-2010.
"If we have to go back to Iran, sanctions have to be lifted and contracts have to be profitable, otherwise there is no point. If that is the case, be sure that Total will be in the competition."
The government has established a new Iran Petroleum Contact (IPC) whereby the drawbacks of previous buy-back framework have been revised, creating a new investment model for oil contracts as part of the drive to win back Western business.
If Tehran reaches a deal with world powers on its disputed nuclear program and international sanctions on Iran are lifted, the new IPC model contracts are expected to be revealed to foreign companies in London, from Feb. 23 to Feb. 25, 2015.
"It will have to be an attractive contract. It will have to be a good balance between the risk you are taking, the value you are bringing and the value you get," Michel said.
He added that the plunge in global oil prices over the last several months would also change the way Total looked at some projects in the Middle East in the short term. He did not elaborate.
