Iran plans to convince international companies to invest in its oilfields by offering them more lucrative contracts as part of efforts to repair its battered economy and improve relations with the western world. The move comes as Tehran and Washington engage in the most constructive negotiations for several years about curbing Iran’s nuclear programme, which could pave the way for a loosening of sanctions that have crippled the oil industry. In a rare interview, Mehdi Hosseini, an adviser to the oil minister, said the system of “buyback” contracts – which do not allow foreign companies to book reserves or take equity stakes in Iranian projects – would be scrapped. Mr Hosseini said the government was developing a “win-win” type of contract so leading companies “whether American or European” could benefit. Details are expected to be revealed in London next March, he said, as part of an attempt to attract at least $100bn in investment over the next three years. The overhaul would mark a big step for a regime that has traditionally been hostile to any form of foreign ownership of its vast oil and gas wealth. Iran has the world’s largest gas reserves and fourth-largest oil reserves. “We hope that with these preparations the language of our contracts will be very, very close to international norms and that we will see [international companies] queueing up once again,” Mr Hosseini said. Robin West, senior adviser to IHS Energy, a consultancy, said: “Iran has a long history of aggressive resource nationalism, and I doubt that will change. They have always had very aggressive fiscal terms and tried to shift the investment risk to operators while keeping the lion’s share of revenue.” But he said the country’s mature reserves required heavy investment from western majors and to coax them in, Tehran would have to offer “extremely attractive terms”. He added: “If they do, it’ll be a real break with the past.” Mr Hosseini said that while sanctions might not be lifted “formally, quickly and simultaneously” there were ways that companies and governments could circumvent them. American and European sanctions have caused a slump in oil production that has battered Iran’s economy. In September production fell to 2.58m barrels a day, according to the International Energy Agency, its lowest level since 1989, when the country was grappling with the impact of the Iran-Iraq war. Iran produced 3.5m b/d in 2011, before sanctions took hold.
Mr Hosseini acknowledged that unattractive contracts have long deterred western companies. “These problems did not let us keep good relations with oil companies in the long run. We will use all our previous experience . . . to understand and accommodate the logical expectations of oil companies.