The 'Red' Status of Oil Investments in Iran

The head of the Energy Commission of the Iran Chamber of Commerce announced the 'red' status of oil investments in the country due to the lack of foreign investment. Arash Najafi stated on Tuesday, July 5, to ILNA news agency that no direct investment is entering the country, adding: 'All investors, depending on their financial capacity, are entering projects through banks. Foreign banks, regardless of sanctions, refrain from investing due to Iran's placement on the Financial Action Task Force (FATF) blacklist.' The situation of Iran regarding the FATF has been raised multiple times in the debates of the candidates for the fourteenth presidential election, with some candidates criticizing Iran's presence on this blacklist and the obstruction of laws to join it. The Chamber of Commerce official further emphasized that investors do not enter projects when they cannot obtain the necessary guarantees. The government has only allocated $3 billion for oil investments this year. In the first meeting of the Economic Council chaired by Mohammad Mokhber, the interim president of Iran, in early June, a 'rapid plan' to increase Iran's daily crude oil production to '4 million barrels' with a foreign investment of $3 billion was approved. According to a report by the Research Center of the Parliament, annual oil investments in Iran during the 1380s (2001-2010) were above $18 billion, but this figure decreased to $7 billion in the first half of the 1390s (2011-2020) and has fallen to $3 billion since 1397 (2018). The last major foreign investment in Iran's oil sector was related to the South Azadegan field, signed by the China National Petroleum Corporation (CNPC) in 2009. Despite Iran pre-selling the oil produced from the Azadegan field to this Chinese company, the project was left unfinished. The value of the mentioned contract was $1.76 billion, and Iran settled the principal and profit of the Chinese company by delivering the produced oil from this field. According to reports from the Iranian Ministry of Oil and the U.S. Energy Information Administration, 80% of Iran's active oil fields are in the second half of their lifespan, with annual production declining by 8 to 12%. Iran needs over $20 billion in annual investment to maintain its oil production levels. The Islamic Republic is currently preventing a rapid decline in oil production by drilling more wells, but it faces significant delays in developing new fields. The approved $3 billion investment for the year 1403 (2024) comes at a time when the International Energy Agency estimates that $570 billion is expected to be invested in oil and gas fields worldwide this year, which is 9% more than last year. Iran has the second-largest gas reserves and the fourth-largest oil reserves in the world, but its share of global oil investments is only half a percent.