Iran is in dire need of investment to boost domestic production, Oil Minister Bijan Namdar Zanganeh said.
“The most important measure we should take is to facilitate the flow of investment in the oil sector. A country like Iran that requires investment should not put itself in a position in which capital flight happens,” Zanganeh was quoted as saying by ISNA on Monday in the parliament’s special commission for propping up domestic production.
To help make the economy more self-sufficient, Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei has declared “Support for Iranian Products” as the main theme of the new Iranian year that began on March 21.
Zanganeh noted that the Iranian government uses a large part of oil revenues to pay for the monthly cash subsidies. Hence, it has to resort to foreign or domestic private investors to finance mega projects, especially in the petroleum industry.
As part of the Subsidy Reform Plan, the previous government removed energy subsidies in 2010 and paid 455,000 rials (about $7.5) to each and every Iranian on a monthly basis. The controversial plan has been retained by the administration of President Hassan Rouhani.
"Creating jobs is much more important than increasing oil output," he said, adding that the ministry has compiled a list of domestic contractors, who use local products in their oil and gas operations, to extend more support.
Zanganeh believes that an effective strategy to help Iranian contractors improve their products' quality is to invite them to bid for oilfield development agreements.
Commenting on his ministry's investment programs, he noted that between 2011 and 2012, close to $42 billion were invested in oil and gas ventures, yet much more investments are required to keep the oil industry's wheels running.
"The ministry has assigned many contractors to provide all their needed products from local manufacturers. If $4 billion worth of energy projects were handed over to Iranian companies, not only would they activate the industry but also bring in domestic contractors and the investment cycle would be established," he said.
“Currently, a large number of Iranian refineries should be renovated and we have about 20 pipeline leaks daily. Measures should be taken to use Iranian products for such projects.”
Referring to Iran’s progress in the past two decades, Zanganeh said the country could not lay even one meter of offshore pipeline 20 years ago and had to order simple petroleum equipment from Singaporean manufacturers.
“This is while several Iranian firms, namely MAPNA Group, an energy and engineering conglomerate, as well as Petroiran and Petropars energy companies, are now able to manufacture advanced oil equipment and platform decks, which indicate a significant progress in producing petroleum equipment,” he added.
On the ministry’s deal with French oil and gas giant Total on the development of South Pars Phase 11, the minister stressed that domestic companies won 80% of Total’s first stage of tenders for the project’s subcontracts in a fair competition and without any interference of the ministry.
Underscoring that the oil industry needs $200 billion in investment for its development projects, Zanganeh said to increase domestic participation in oil and gas projects, foreign contractors are obliged to select an Iranian partner.
