Billion-Dollar Contracts: A Barrier to the Cancellation of the Nuclear Agreement

The American news network Bloomberg reported that although investment in Iran has been less than expected since the nuclear agreement in 2015, billions of dollars in contracts signed with Tehran represent a barrier to the future cancellation of the nuclear agreement. Bloomberg noted the list of Iran's contracts with foreign companies after the JCPOA and added that the investment climate in Iran changed after the implementation of the JCPOA in January 2016, with Tehran's hotels filled with foreign business delegations. However, Donald Trump, the President of the United States, has imposed new sanctions against Iran and stated that the U.S. government is seeking a way to demonstrate Tehran's non-compliance with the JCPOA. Meanwhile, other contracting parties, namely China, Russia, France, Germany, and Britain, have supported the JCPOA, and some companies from these countries have invested significantly in Iran so far. According to the report, Iran intends to sign oil and gas contracts worth more than $60 billion in the current Iranian year. However, it is still unclear how severe future U.S. sanctions will be. Recently, Hossein Zamaninia, Iran's Deputy Oil Minister, stated regarding the development contract for Phase 11 of South Pars with the French company Total that 'in the event of the return of sanctions, without any doubt, Total and other oil companies will cancel their contracts with Iran.' Total had previously stated that this deal was 'risky' but worth it considering the large energy market in Iran. Bloomberg's report also referred to a list of contracts Iran has signed. According to this report, Total and CNPC signed a 20-year contract worth $5 billion for the development of Phase 11 of South Pars. South Korea's SK Group also signed a preliminary contract worth $1.8 billion with the National Iranian Oil Engineering and Construction Company to optimize the Tabriz refinery. Additionally, Turkey's Unit International signed a $4.2 billion contract with the Ministry of Energy to construct seven gas power plants, and Sinopec signed a $1.2 billion contract with the National Iranian Oil Refining and Distribution Company for the development of Phase 1 of the Abadan refinery. Royal Dutch Shell also signed a contract aimed at evaluating three major oil and gas fields in Iran, including the Azadegan and Yadavaran fields near the Iraqi border. According to Bloomberg, Renault signed a €660 million contract with the Organization for the Development and Renovation of Industries of Iran and Parto Negin Nasih, the importer of Renault products, for a joint investment to increase car production in Iran. Volkswagen also returned to the Iranian market after a decade, reaching an agreement with Mammut Khodro Iran to sell two models of its cars. Meanwhile, Peugeot-Citroën signed a joint investment contract worth €400 million with Iran Khodro. This company also signed an agreement with Saipa to invest €300 million over the next five years in production and research and development. Boeing signed a $3 billion contract with Aseman Airlines for the sale of 30 Boeing 737 jets and a $16.6 billion contract with Iran Air for the sale of 80 aircraft. ATR also signed a $536 million contract with Iran Air, and Airbus signed a contract for the sale of 100 aircraft worth $19 billion with Iran. According to this report, Alstom, the Organization for the Development and Renovation of Industries of Iran, and the Iranian Rail Industries Development Company reached a preliminary agreement to build train and metro cars. Transmashholding and the Organization for the Development and Renovation of Industries of Iran also signed a $3 billion contract for the joint production of rail cars. Siemens signed a €1.5 billion contract for the construction of rail cars and the optimization of the rail system. The Chinese company CRRC reached a $2 billion agreement with Iran Aluminum Company, Iralco, to establish a production unit. MTN reached an agreement to purchase 49% of the shares (worth $40 million) of a state internet company and to invest $750 million in a fiber optic project.