In a further sign that Iran is opening to the world economy, the parliament in Tehran gave the green light to foreign investors to develop the country's richest oilfields.
Despite the opposition of several conservative deputies, the Majlis gave a go-ahead to the oil ministry to sign buy-back contracts worth $2.8 billion in foreign investment, which will be earmarked for the development of the Azadeghan fields in southwest Iran.
The fields hold about 26 billion barrels of crude oil, and it is estimated that they will produce about 300,000 barrels per day.
Iran’s 1979 constitution outlaws foreign concessions, and that is why buyback contracts were introduced in the mid-1990s According to such contracts, the investor who puts up capital receives a fixed profit margin from the sale of the oil produced.
Under such an arrangement the foreign company has no long-term interest in the oil field, but Iran assumes all the risk.
The Iranian oil industry is in urgent need of foreign investment. At a 1998 conference at the Royal Institute of International Affairs in London, a former deputy foreign minister of Iran, Abbas Maleki, estimated that his country required a cash injection of about $40 billion the year 2008 to promote its economic development.
But, despite the need for outside investment, the conservative wing of the parliament has opposed the buyback system, stating that it threatens Iranian sovereignty over its assets, and does not contributing significantly to technology transfer or even to the creation of jobs.
On of the more vocal critics was Mostafa Taheri Najafabadi, the chairman of the parliament’s energy committee. He contended Iran should halt buyback deals at once and pursue the projects on its own. If not, he said, the country would face heavy financial losses and renewed foreign domination of rich energy resources. – (Albawaba-MEBG)
© 2001 Mena Report (www.menareport.com)
