Richard Thompson

Richard Thompson

International oil companies (IOCs) and analysts have been waiting for months to find out the terms and conditions of Tehran’s long-anticipated new oil contracts.

Sadly, they are going to have to wait a little longer to find out what they need to know.

The new Iran Petroleum Contracts, which are expected to be offered to the IOCs for exploration and production sharing arrangements in return for investment in the development of oil and gas fields, were unveiled to the 137 IOCs gathered in Tehran on 28-29 November by Iran’s Petroleum Ministry.

The ministry distributed details of more than 50 projects for which it is seeking international partners, but executives were left disappointed at the lack of specific detail.

All eyes now turn to London on 22-24 February, when Tehran plans its international unveiling.

For everyone looking forward to the promised opportunities that lie in wait in Iran once international sanctions are lifted, the frustration experienced by the oil executives is something they should be prepared to share.

Ongoing opposition

Far from being the opening of the flood gates, the development of international business and investment in Iran post sanctions will be a slow and frustrating process, with many setbacks on the way.

The first challenge is set to come on 15 December when the International Atomic Energy Agency (IAEA) reports to the UN on its inspections of Iran’s nuclear facilities.

 “Even once the nuclear sanctions are lifted, many additional sanctions remain in place preventing US companies and citizens from doing business in Iran”

The contents of the report will be challenged by opponents of the nuclear agreement in Washington, Riyadh, Tehran and Tel Aviv.

Even once the nuclear sanctions are lifted, many additional sanctions remain in place, preventing US companies and citizens from doing business in Iran.

Additionally, the ongoing sanctions restrict dollar transactions with Tehran.

This means that any bank with operations in the US is going to be unwilling to expose itself to the risk of breaching sanctions by facilitating business with Iran.

The Islamic Republic offers huge potential opportunities for regional and international business. But every step of the way, opponents of the nuclear deal and of the lifting of economic sanctions will seek to expose and undermine the process.

The nuclear agreement includes “snapback” clauses that allow sanctions to be reimposed upon any breaches of compliance.

This risk of sanctions being imposed again, allied with the unease of international banks, will mean there is a permanent concern adding considerable caution to investors’ views of the Islamic Republic.

It will not be easy.