Austrian OMV Deems Iranian Contracts Unfit for Investment

The Austrian Energy Group OMV does not believe Iranian oil contracts are fit for investment, according to statements made by the group’s CEO on Wednesday.

In January, Iran struck a deal regarding the status of the country’s nuclear program with the United States, the United Kingdom, France, China, Russia and Germany, causing several sanctions against the struggling Iranian economy to be lifted. Four months later, OMV signed a memorandum of understanding with the National Iranian Oil Company regarding the terms of several new development projects.

CEO Rainer Seele of OMV said the process to finalize the details of an international model contract with Iran had not been completed yet, making it difficult for new projects to start.

"This process is still ongoing, this is taking quite a long time... We have not yet defined a clean framework for the projects that are interesting for us," Seele said to Reuters in an interview when asked about how long developing a contract might take. "We can make an investment decision only when we really know what the framework and the conditions are."

OMV has demonstrated interest in two major Iranian oil fields: the Zagros area in western Iran and the Fars field in the south. The company has previously commenced operations in Cheshmeh Kosh and Band-e-Karkheh fields in 2001.

Iran’s state broadcaster IRIB said the country’s state cabinet had approved a draft bill for new and old oil and gas contracts, which laid out 150 changes to the previous model contract.

OMV has also been awaiting Iran’s repayment of a previous debt related to exploration and development activities in the countries.

"If you owe me money and you're not giving it back to me and then want to proceed with me in the future, would you think that's a good combination?" Seele said regarding the debt linked to OMV's activities before international sanctions on Iran went into effect in 2006.

"We are in intensive talks (about this) that have not yet achieved their objective."

By Zainab Calcuttawala for Oilprice.com

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