Normalization of Int'l Ties Key to Attracting FDI

EghtesadOnline: Iran's oil and gas industry cannot experience a turning point in attracting foreign direct investment unless it reduces investment risk by normalizing its relations with the world.

News ID: ۷۴۵۰۸۱

27 February 2018

Mehdi Asali, the Oil Ministry's former director for OPEC affairs, made the statement in an interview with Shana on Monday.

"As long as constraints on financial transactions are not removed, the industry can neither have access to cutting-edge know-how nor be rehabilitated," he said.

According to the official, at a time when oil is being traded at around $60, OPEC members can be more successful compared with non-OPEC members in attracting investments to explore new hydrocarbon reserves and expand upstream industries, Financial Tribune reported.

"Iraq and North African states cannot take advantage of the situation due to their unstable socioeconomic conditions," he said, adding that such challenges dampen international financiers' enthusiasm as they never expose themselves to high risk.

Referring to the International Energy Agency's report, he noted that investment in oil and gas sector has suffered a $20 reduction in the last three years because of low crude prices.  However, OPEC members have been more prosperous in developing their oil sector as low oil production expenses keep the industry lucrative in these countries.

Asali believes that oil consumers are worried about a sudden surge in prices in the following years, as it will put them under inflationary pressure.

Asked about the output reduction deal between OPEC and non-OPEC members, the official added that all these countries have been fully committed to the agreement, because of which the imbalance in global oil supply and demand has been partially redressed.

"As long as Saudi Arabia cannot increase its output, it will do its best not only to extend the deal but also to keep prices in the $60-70 per barrel range so as to not lose its market share to rivals," he said.