Iran to woo oil companies with ‘sexy’ contracts, Total CEO says

Bloomberg

By Tara Patel and Francine Lacqua

Iran plans to offer oil companies improved terms to develop oil and natural gas fields once a trade embargo against the country is lifted, Total SA (FP) Chief Executive Officer Christophe de Margerie said.

Contracts will be “more sexy than before,” De Margerie said today in an interview at Davos with Bloomberg TV. “They are definitely expecting the embargo to be lifted.”

Europe’s third-biggest oil company, which stopped work on Iran’s South Pars gas field in 2009 as the U.S. tightened sanctions, has “no specific right to restart” work on previous projects, he said. “Our project when we left was ended.”

Hassan Rouhani, Iran’s first leader in a decade to visit Davos for the World Economic Forum, needs deals to rescue an economy that shrank more than 5 percent last fiscal year under the weight of sanctions. Some will be lifted, along with capital controls, after a Nov. 24 deal in Geneva. Rouhani attended a meeting with energy executives including De Margerie yesterday.

Negotiations will continue on eliminating the trade sanctions in exchange for controls that ensure Iran’s nuclear program is limited to power generation.

“The message was as usual ‘We have plenty of oil and plenty of gas. We need your management skills, we need your technology. We don’t really need your money,’” according to De Margerie. “He said ‘We would like you to come back in our country, which is prepared to offer you new terms, new contractual terms’” in a few months.

Photographer: Simon Dawson/Bloomberg

South Pars

Iran’s priorities include developing South Pars, where Total had worked to increase export capacity, and redeveloping old fields to enhance output, the French executive said.

The Paris-based International Energy Agency, an adviser to 28 nations, estimated on Jan. 21 that purchasers imported about 1.07 million barrels a day from Iran in 2013. Oil prices fell in late November after Iran reached a preliminary agreement.

“The fact that they are telling us to start moving, to get ready, should mean that they are ready to make moves on the political discussions,” De Margerie said. “Otherwise there is no reason for them to come to tell us to be ready.”

Any production from Iran would come after 2017, he said.