The 11th Annual Oil & Gas Forum entitled "New Developments in World Oil & Gas: Challenges & Opportunities" was held in Tehran with Iranian oil officials underlining the need for foreign investment in energy rich countries. The calls by Iranian oil industry officials coincided with the declining trend of foreign investment within the country.

Kazem Vaziri Hamaneh, Minister of Petroleum

Iran’s Petroleum Minister spoke of the world’s dependence on oil and gas resources in the Persian Gulf and the Minister of Economy stressed two-way communication between holders of resources and owners of capital and technology in order for both sides to reap more benefits. The speakers underlined "investment security" as one of the most significant assuring factors for oil and gas producers.

The Minister cited energy demand security as another dimension of energy security and mentioned, "Unfortunately, this aspect has been overlooked while the economy of oil producing countries such as Iran depends on oil revenues." He added that the big producers require investment security as well as security in acquiring advanced technology in order to properly participate in energy supply.

In fact, he said, the continued supply of oil and gas into the world markets requires huge investments in these sectors and the role of technology in improving the coefficient of productivity and raising the potential of producers like Iran is undeniable.

Hamaneh said market security would lead to oil and gas price stabilization at a reasonable level. "Certainly, we will not be able to find an alternative to oil and gas in the short and long terms. Therefore, the world has to rely on the oil resources of the Persian Gulf. However, political interventions as well as economic and political sanctions have produced relative instability and endangered energy supplies."

Iran has implemented development plans in the oil sector in recent years, he said, adding that in addition to making up for the natural production shortage, the country has increased its oil production capacity. "By implementing development plans in the upstream oil sector, Iran’s oil production capacity has increased to about 4.3 million barrels per day while gas production has reached 435.1 million cubic meters per day."

He also said global demand for natural gas will increase from 2.8 trillion cubic meters to 4.7 trillion cubic meters annually. Therefore, he noted, based on forecasts around $20 trillion should be invested in the energy sector during 2005-2030 in order to meet the growing needs of the global community. Thus, he added, the oil and gas sectors must attract $4.3 and $3.9 trillion in investment respectively in order to meet the global demand over the said period, meaning an average of $315b annually. Danesh Jafari also said the execution of Article 44 of the Constitution will pave the way for foreign investments in Iran. "Right now the market is moving in a direction where producers are gradually losing their power of pricing and market control. Therefore, the best strategy to overcome future energy crises is to encourage free trade and investment in production zones."

The minister continued by saying that the oil industry had become global 100 years ago, adding: "Rivalry in this industry will grow considerably and the likelihood of unilateral sanctions has also diminished." He said the U.S. sanctions against Iran have been overlooked by its European allies. "But in case of new sanctions not only would Iran suffer but the U.S. would also pay dearly. The heaviest price the United States would have to pay is its presence in the global market as an unreliable trade partner."

Nozari added that the NIOC will finalize and implement contracts worth $84 billion by the next Iranian year. The official also pointed to effort by the NIOC to formulate a plan according to which the recovery rate from the fields will be increased by 0.5 percent each year within a ten-year period.

Nozari announced that NIOC plans to produce 149 billion barrels in 2009 and 156 billion barrels in 2014 (or 7 million barrels per day). "Although industrial countries have worked hard in the field of alternative energies, the global need for crude oil and gas will continue to grow in the coming decades," he said. He also underscored the need for preparing the grounds for attracting investments. "In order to attract more investments, changes have been made to buyback contracts. These changes include the preparation of a comprehensive development plan in buyback contracts that do not interfere with the production process, determining capital expenditure and further control over tender bids, creating a supervisory system for production in buyback contracts," he said.

Nozari pointed out that the categorization of oilfields and implementation of oil contracts in one, two, or several phases are among the modifications made to the buyback of oil and gas contracts. "Although Iran has a potential of producing 740 million barrels of oil per year, it only produced 137.5 billion barrels," he noted.