Investment in oil, gas and petrochemicals projects will be priority for post-sanctions Iran
Tehran is lining up $100bn worth of energy deals it wants to sign in the aftermath international sanctions being lifted, according to a new report by Middle East business intelligence service MEED.
The lifting of sanctions on Iran is one of the most significant changes to the regional business landscape ever seen in the region and it offers huge opportunities for Iranian and international businesses.
The recently released Opportunity Iran 2015 report says that large-scale investment in oil, gas and petrochemicals projects will be Iran’s top priority once international economic sanctions are lifted.
Iran has the fourth-biggest oil reserves and the largest gas reserves in the world, but years of isolation from the global market has left its hydrocarbons sector in dire need of modernisation.
Investment in Iranian projects is expected to surge once the removal of international sanctions opens the major Middle East economy for business.
The country’s petrochemicals sector – already the region’s second largest – is set to benefit from a wealth of cheap feedstock as Iran starts up new phases of its offshore South Pars gas development in the Gulf.
“The Iranian economy has long been the region’s sleeping giant and could represent the world’s largest frontier market for investors after international sanctions are lifted,” says Mark Watts, MEED’s Oil & Gas Editor and co-author of Opportunity Iran 2015 report. “The country’s oil and gas sector has suffered from chronic underinvestment and is need of modernisation and expansion to reach its potential as a global energy powerhouse.”
The 200-plus page report, Opportunity Iran 2015, provides a detailed analysis of the system of governance, the outlook for the economy, existing sanction regimes, along with all the major business sectors including banking & finance, oil & gas, petrochemicals, mining, industry, power & water, construction & tourism and transport, as well as a special chapter on doing business in Iran.
The main United Nations, US and EU sanctions impacting Iran could be lifted, at the earliest, at the end of 2015 after the final assessment by the International Atomic Energy Agency (IAEA).
Iran will aim to expand its oil production in two phases. The first phase will see National Iranian Oil Company (NIOC) reviving its crude output to pre-2012 levels as sanctions relief opens up export markets. From 2020 onwards, Iranian crude capacity is set to increase further with the influx of investment and technology from international companies. Investment will allow NIOC to deploy enhanced oil recovery (EOR) technology at its ageing fields, revive stalled field developments, and carry out greenfield developments at untapped assets.
“Qatar utilised its offshore gas assets to become a global leader in liquefied natural gas (LNG) exports – something Iran has failed to replicate due to its inability to procure liquefaction technology,” says Watts. “With sanctions lifted, Iran will have access to this technology and could rival Qatar and other LNG leaders within the next decade.”
Opportunities are not limited to the oil and gas sector. Iran is expected to receive significant investment in metals & mining, automotive, aviation, power & water and tourism industries.