Some foreign companies say oil agreements lack flexibility in Iran.

Some of the participants in the 10th International Oil, Gas and Petrochemical Exhibition in Tehran say investments in Iranian energy projects are safe and profitable.
In separate interviews with Iran Daily, some others, however, complained about widespread mismanagement and improper laws governing oil deals.
The exhibition wound up last Sunday with European firms dominating the 441 stalls allocated for foreign companies.
The interest evinced by Europeans in the exhibition showed once again that despite diplomatic differences, major international companies are still interested in competing in Iranian energy projects. The message was "trading activities could take advantage of political situations." The striking proof was the vast participation of French companies in the giant fair in the absence of American firms.
Stephane Montagnon, country sales director of French Nexans Group, a leading international company in the cable industry, which is supplying several phases of the giant South Pars project with industrial cables, told Iran Daily the company has conducted feasibility studies on investment projects in different Middle Eastern countries and has come to the conclusion that among them Iran is the safest and the most profitable.
Pointing out that investment risks are relatively low in Iran, Montagnon said while the United States remains to be a trading partner for Nexans, the company does not feel any obligation to follow Washington's policies.
He said the French company supplies 28 percent of Iran's need for industrial cables, adding that an Italian firm and an Iranian company are the staunchest rivals on the Iranian market.

The French Nexans Group has come to the conclusion that among regional countries, Iran is the safest and the most profitable for investment.

Bureaucracy
He criticized extensive bureaucracies in Iran for the slow pace of decision-making, stressing that the company has to wait for several months for a decision to be made by Iranian officials.
Also speaking to Iran Daily was Markus Turezyn, financial manager of OMV Exploration and Production Ltd. of Austria who said the main problem with working with Iran in energy projects is the mode of oil agreements. He stressed that buyback deals are not used for exploration projects in other countries.
"Exploration projects involve high investment risks and buyback deals used in the oil and gas exploration sector in Iran would increase the financial risks," he said, adding that oil agreements lack flexibility in Iran.
"When oil prices go up, the (Iranian) government would only be benefited," he said, adding, however, that companies involved in energy projects would not pay compensations if oil prices fall.
Turezyn said the next Iranian president could play a crucial role in improving the investment conditions for foreign companies.
He expressed hope that his company, which is currently involved in a five-year project to drill three oil wells, would continue its cooperation with Iran in the future.
He said the company follows the line of the European Union, stressing that the 25-member bloc is of the opinion that there is no room for concern as far as Iran investments are concerned.
Another company involved actively in energy-related research projects in Iran is Gaz de France, which is operating here for almost three decades.
Jean Louis Chenel, director for trade development of the company, told this newspaper that Gaz de France believes buyback is not an appropriate contract mode for gas projects, stressing that the company is more interested in long-term gas deals.
He said, however, that Gaz de France is willing to continue cooperation with Iran, despite the latter's insistence on buyback deals.

Buyback Deals
The French gas official further noted that buyback deals would benefit the Iranian government in the short-run but would damage the financial interests of both parties' at the end of the day.
He is of the opinion that political issues would have little impact on the company's cooperation with the Islamic Republic.
British Gas (BG) was also represented in the exhibition. Some five years after its arrival in Iran, the company has not yet managed to win a major gas project.
Soheila Kowsar, deputy managing director of BG, told Iran Daily that the company has repeatedly reminded the Iranian oil and gas authorities that BG and British Petroleum (BP) are two different entities.
BP had announced earlier that it would withdraw from Iranian projects under US pressures.
"BG is not a political company and it is a small firm involved only in technical and engineering activities," she said, adding that the company is facing US sanctions in certain areas.
The exhibition was held in a total area of 15,000 square meters.

High parity rate of the dollar has helped the government plug its budget deficits.

Two years ago, the top economist of the post-Islamic Revolution era, namely Mohsen Nourbaksh passed away. During the last months of his fruitful life, Nourbaksh was dragged into a controversy, which he had never before encountered.
Ahmad Tavakoli, a main critic of the governments of Akbar Hashemi Rafsanjani and Mohammad Khatami, decided to write a letter to President Khatami. Tavakoli, at the time was member of faculty of College of Economics of Martyr Beheshti University. He claimed that the high price of the dollar did not comply with the market conditions while reasoning that the government was forced to resort to foreign markets, including Dubai, for selling the dollar. This itself implied that the government was involved in money laundering, he charged.
He further argued that the rial earned from sales of the dollar in Dubai was a result of smuggling and the government actually engaged in smuggling by selling its dollars in Dubai. He further charged that the government legalized the 'dirty rials' and thus the money was eventually laundered in the process of the transactions of the Central bank of Iran (CBI).
Tavakoli stressed that the high parity rate of the dollar was only because the government wanted to compensate for its budgetary deficit. Therefore, he claimed that in a bid to earn more revenues, the government sent national income abroad, which in essence led to more money laundering in the national economic system.
The letter actually preoccupied Nourbaksh’s mind, who constantly talked about it in press interviews. However, Tavakoli called for holding a debate with Nourbaksh in the presence of a jury made up of university professors. At any rate, Nourbaksh’s death did not allow Tavakoli to fulfill his desire of confronting the operation system of the CBI.
When the Seventh Majlis took charge and viewpoints similar to that of Tavakoli dominated the scene, the issue of dollar parity rate became a serious source of friction between the government and Majlis in the process of ratifying the 2005-06 budget bill. The dispute gained momentum when the Majlis Joint Commission accepted the parity rate of 9095 rials for the dollar as proposed by the government and 130 MPs objected to the commission’s decision. The proponents of reducing the dollar parity rate underlined the points that Tavakoli had raised in his letter to Khatami. It was consequently once again proved that the issue of the dollar parity rate would for a long time remain a heated subject of debate among economic experts of the country.
Nevertheless, several days ago, the dollar parity rate was set in compliance with the government’s proposal. It seems that parliamentarians have correctly understood that despite the passage of the bill for stabilizing prices of goods and services for the New Year and the increase in the budgets of certain organizations, reduction of the dollar parity rate would lead to the reduction of the government’s rial revenues and hence they have accepted the government’s proposal.
It appears that for the time being the debate on the dollar parity rate has been settled. But, it is obvious that this debate will emerge again sooner rather than later because the very structure of the oil-dependant economy relies on the dollar exchange rate. Moreover, all trade activities are contingent upon the dollar parity rate and merely avoiding a budgetary deficit cannot determine the dollar exchange rate.
Perhaps the current decision made by the government and Majlis is in the best interests of the country for the time being. Let us hope this is actually the case.