Foreign firms must partner with locals to win Iran contracts

Iran’s Minister of Petroleum Bijan Zanganeh this week said that foreign companies would need to partner with Iranian companies in order to win work in Iran’s oil industry.

Zanganeh, who was quoted by the official energy sector outlet Shana, said that Iran had always welcomed the presence of international firms in its energy projects.

Speaking on the sidelines of the 25th Iran Oil, Gas, Refining and Petrochemical Conference, he added that there were various stipulations under consideration for allowing companies to work in the energy sector, but the most important of these would be partnership with a local firm.

This comes as little surprise, given that Iran has long implemented an approach of knowledge-transfer on all projects involving international operators or contractors. However, that he said it in the week following the swearing into office of US President Joe Biden suggests that Tehran is hopeful that US sanctions will be removed, in theory allowing IOCs to return.

That being said, recent deals awarded to local companies by the Ministry of Petroleum (MoP) may actually create a further stumbling block given these companies’ direct or indirect relationships with the Islamic Revolutionary Guard Corps (IRGC).

Khatam-al Anbiya Construction Headquarters (KAAC), the engineering arm of the hard-line IRGC, was awarded a contract in early January covering the second, third and fifth phases of the 63bn barrel Ahvaz oilfield as well as the offshore Reshadat deposit.

Meanwhile, Mashin Sazi Arak, in which KAAC is known to hold shares, was awarded a deal for the Bibi Hakimeh oilfield, which has around 500mn barrels of oil remaining.

While the group has interests in various assets such as the supergiant South Pars gas field and Marun oilfield through its reported 812 affiliates and subsidiaries, including the high-profile MAPNA Group, Oil Industries Engineering and Construction (OIEC), Iran Marine Industrial Co. (SADRA), Persia Oil and Gas Industry Development Co. (POGIDC), Tadbir Energy Development Co. and Mashin Sazi, this week’s contract award appears to have been the first directly awarded to KAAC for several years.