As the largest untapped market with a very young population, the lifting of sanctions will give rise to a host of new opportunities for foreign businesses with a prior presence in Iran as well as those interested in entering the Iranian market.
Delegations from various European countries have been visiting officials in Iran since the finalization of the nuclear deal in July 2015 to explore projects in tourism, transportation, technology, foodstuff, aviation, machinery as well as oil and gas, the Jordan-based news, blogging and media website Al Bawaba reported.
New Iranian legislations such as the Foreign Investment Promotion and Protection Act have come into force to attract more foreign investment. They remove previous restrictions on the percentage of foreign shareholding in Iran and offer the possibility of registering an Iranian company with 100% foreign capital as well as unlimited transfer of capital and dividends where applicable.
Years of western economic sanctions against Iran came with a cutoff of key banking channels, corresponding relationships and swift services, which distanced the country’s financial sector from the international banking sector.
What remains essential now is the reestablishment of banking channels and international ties with Iranian banks and their foreign branches and subsidiaries.
As the holder of the world’s largest gas reserve and the fourth-biggest oil reserves, Iran recently revealed its remodeled Iran Petroleum Contract replacing its previous buyback deals.
This is in line with Iran’s intention to increase its oil production capacity after the lifting of sanctions to approximately 5 million barrels a day from about 1 million bpd since the imposition of sanctions on Iran’s oil and gas sector.
The new IPC will cover exploration, development and production, which will be offered to contractors as an integrated package for an estimated duration of 15 to 20 years. Iran hopes to attract around $30 billion of foreign investment to realize its intention of increasing oil production despite the falling oil prices.
The new framework is expected to create a win-win situation for both the foreign investors and the Iranian side of the deal, and hopefully attract medium-sized foreign investors as well as multinationals.
It will also bring about potential opportunities for foreign companies to work on energy reserves or take equity stakes in Iranian companies. It is worth noting that the National Iranian Oil Company will maintain exclusive ownership of all resources.
