The chief architect of Iran’s new oil contracts has said domestic companies linked to the country’s Revolutionary Guards may be approved to partner international energy majors.
Speaking on the sidelines of the Oil & Money conference in London on Tuesday, Seyed Mehdi Hosseini said he was not opposed to companies owned by or linked to the elite military unit with deep ties throughout the Iranian economy taking part in joint ventures.
“The point of these Revolutionary Guards is that they are engineering companies, normal engineering companies, that have done something in Iran, they have got experience,” said Mr Hosseini.
“It depends on the quality and selection of the IOCs [international oil companies],” he said. “If the IOCs want to work with them, we have no problem. We are not going to interfere in the private negotiations between private companies and the IOCs on what kind of arrangement they have.”
Mr Hosseini said the most important thing was to have “qualified” companies operating in the joint ventures. He did not clarify whether this meant companies linked to the Islamic Revolutionary Guards Corp (IRGC) would be on the final list of approved companies for partnership with western companies.
The EU will delist the IRGC’s main construction arm Khatam Al Anbia, which controls more than 800 companies, eight years after sanctions are lifted. The US is expected to maintain sanctions against entities linked to the IRGC.
While energy majors have visited Iran to discuss possible deals, they will be cautious with their re-entry and have emphasised that they will comply with both existing sanctions and any future restrictions.
Mr Hosseini said Iran will be able to increase production by 500,000 barrels a day within several months of any lifting of sanctions, which he estimates will take place early next year. A further increase of 1m b/d would take another 12 months.
He added that ultimately Iran wanted western investment to contribute to a further 2m b/d increase in oil production capacity in coming years through more than 50 energy production and development contracts. Additional supply will be presold to traditional customers in Europe and Asia.
The terms on offer to western companies — approved by parliament last week and to be revealed in Tehran and London in the coming months — are expected to be better than historical oil and gas agreements with Iran.
Mr Hosseini stressed the lucrative nature of these new deals, with a longer duration of about 25 years, that would provide oil majors with more flexibility and less risk.