Gov’t Encouraged to Sign Contracts With Oil Majors

Respected energy expert and economist Ali Shams Ardekani has pleaded with the government not to waste precious time in finalizing oil and gas deals with international majors despite the opposition from his political opponents who are against opening up the economy and energy sectors to foreign investment.

"We are better off signing some contract rather than having no contract at all," Shams Ardekani, head of the Energy Commission of Iran Chamber of Commerce, Industries and Mines, was quoted as saying Saturday in an interview with ILNA.

Shams Ardekani, a PhD graduate in economics from the University of Illinois, said domestic companies will reap the dividends of the new oil deals, dubbed as Iran Petroleum Contract.

"The new contracts stipulate that part of oil and gas projects must be carried out by Iranian companies. The crucial collaboration can and will lead to attracting finance and expertise," he noted.

According to the former diplomat, "For example, an offshore platform for the South Pars Gas Field weighing 20,000 tons is due to be built in Iran. The process will lead to the transfer of technology and create jobs."

According to published reports, most of the existing South Pars platforms weigh around 3,500 tons and the largest so far constructed at home weighs 7,000 tons.

Transfer of technology and partnership in upstream projects have been touted as prerequisites of the new petroleum contracts which offer more attractive terms to multinationals, including bigger rewards for risky projects as well as 20-year terms of cooperation that can be renewed.

The senior chamber official said it is time that all stakeholders in Tehran see clarity of purpose in the key energy sector and put an end to unhelpful and unrealistic expectations from the long-delayed oil contracts.

"Most of the world's biggest oil and gas companies are in the western countries. We can't deal with or compete in the world if we continue to create enemies," he said without elaboration.

Shams Ardekani also said the nuclear agreement between Iran and the six world powers (five permanent members of the UN Security Council plus Germany), serves as a precedent for "how prudence can produce results".

Anti-Iran sanctions were lifted in January of last year in return for curbs the disputed nuclear program.

Over the last several months, major oil companies such as Royal Dutch Shell, Total S.A., Gazprom, Pertamina and Petronas have signed agreements to study Iranian hydrocarbon reservoirs.

However, strong bargaining and tough competition among foreign firms wanting a big share of the energy pie plus elements of uncertainty, due largely to the remaining US sanctions, have delayed the signing of final agreements with foreign oil majors.