Relaxation of sanctions squeezing Iran is just one among several dubious steps necessary if the Islamic Republic is to come close to meeting aggressive targets for oil production.
Increasing Iranian output, now 2.8 million b/d, requires the end of sanctions still in place, which in turn requires the success of international negotiations over the country's nuclear development.
Fulfillment of these conditions is far from certain and far from enough to boost Iranian oil production much.
The country's oil and gas industry needs technology, capital, and markets, points out Paul Stevens, distinguished fellow at Chatham House, London. But the government has "raided the investment pot" of the National Iranian Oil Co.
"The only way the sector's needs can be met is to bring the [international oil companies] into the upstream on a major scale," Stevens writes in a research paper. "The two obstacles to this hitherto have been the economic sanctions and the unattractive terms of the existing buy-back agreements."
Making terms of international participation in Iranian projects appealing won't be easy. Because IOC shareholders "are increasingly disillusioned with the ability of the oil companies to deliver value as reflected in the dividends and share prices," Steven writes, "the industry is faced with a contraction in its future investment capabilities."
At least some Iranian oil officials seem to understand they must compete for a shrinking supply of investment money.
According to Stevens, one of the first actions of Petroleum Minister Bijan Zanganeh after he received his second appointment to the job, in August 2013, was to appoint a committee to review the existing contract.
After several delays, publication of new terms is said to be due this year. To be appealing to IOCs, Stevens writes, the offering will have to include production-sharing, a provision certain to arouse controversy in Iran.
Zanganeh has missed a deadline for increasing Iranian production to 4 million b/d by 2014. More feasible, according to Stevens, is 3-3.5 million b/d, perhaps a year after sanctions end.
(From the subscription area of www.ogj.com, posted on Mar. 6, 2015; author's e-mail: [email protected])
