Executives from Royal Dutch Shell and Eni have met Iranian officials in Tehran to discuss investing in the country's energy industry, the first time international oil firms have publicly confirmed such talks ahead of a possible nuclear deal with the West, the Financial Times has reported.
The meetings, which took place in May and June, are evidence of the growing interest among big oil companies in Iran, which boasts the world's third-largest oil and natural-gas reserves but which will need tens of billions of dollars of foreign investment to realize its ambitions to nearly double production by the end of the decade.
Shell issued a statement saying its officials met counterparts in Tehran this month to discuss outstanding debt owed to the National Iranian Oil Company for crude that had been lifted but not paid for.
They also discussed potential areas for business cooperation should sanctions be lifted.
"We review our growth portfolio on a regular basis and do not exclude any countries that are open to foreign investment," the company said.
Related: Why A U.S Shale Slowdown Will Hardly Affect Oil Prices
"Should future sanctions relief make that possible, we would be interested in exploring with the government of Iran what role Shell can play in developing its energy potential."
Iran produces about 2.7 million barrels of oil a day. But a report by Wood Mackenzie, an energy consultancy, says it could add 600,000 barrels a day of crude production by the end of 2017, assuming that it strikes a nuclear deal with the United States and European Union that lifts sanctions.
Western negotiators have given themselves until June 30 to seal a final, permanent accord aimed at curbing Iran's nuclear program in exchange for the rollback of sanctions on the Islamic republic.
The longer-term gains for Tehran from such a deal could be even greater, says Wood Mackenzie, which sees a rise in total output capacity to as much as 4.4 million barrels by 2025.
Related: Could $12 Trillion Trigger A Renewables Revolution?
This increase would require $50 billion of foreign investment, though, it said.
Claudio Descalzi, Eni's chief executive, also flew to Tehran in May for talks with Iranian Oil Minister Bijan Zanganeh.
The Italian oil major said Descalzi discussed "the possibility of investing in Iran's oil and gas industry again" and "reiterated [Eni's] interest in Iran, provided sanctions were lifted and contract terms were mutually favorable," the company said.
Iran has ambitious goals to increase its oil production capacity to about 5 million barrels by the end of the decade.
Iranian President Hassan Rohani is looking to pursue a foreign policy of moderation after tough financial sanctions have brought the Islamic republic's economy to a standstill.
Related: What Oil Export Ban Means for Investors
Industry insiders say that in an effort to coax back foreign companies who pulled out in 2010, Iran is drawing up new contracts that would replace earlier and widely disliked "buyback" deals with more attractive terms treating foreign groups as joint-venture partners rather than as contractors.
There would also be some flexibility on remuneration, giving foreign investors a rate of return that varies with the risks taken and the oil price, rather than a flat, fixed fee.
Contracts would also run for longer, up to 30 years, according to Iran-focused consultancy Energy Pioneers.
"The Iranians are eager to bring back major oil players," said Fereidun Fesharaki at consultancy Facts Global Energy.
He said that the chief executives not only of Shell and Eni, but executives from Total of France and LUKoil of Russia all met the Iranian oil minister in Vienna this month.
By RFE/RL
More Top Reads From Oilprice.com:
RFE/RL journalists report the news in 21 countries where a free press is banned by the government or not fully established. We provide what many… More