An Iranian bank is planning to target foreigners with the first fund dedicated to investing in the country’s oil and gas industries, in anticipation of a further easing of sanctions against the Islamic Republic.
Kardan Investments is preparing to set up a Global Energy Fund to invest in projects to develop Iranian oil and natural gas fields and joint ventures between local and international oil companies, Chief Executive Officer Majid Zamani said in an interview in Tehran last week. Kardan will seek to sell shares in projects and ventures to institutional investors in Europe, he said.
“Iran’s oil and gas industry needs a lot of investment, and not all of this can come from inside Iran,” said Zamani, a former consultant to the World Bank. “A lot of it has to come from outside.”
Sanctions imposed by the U.S. and EU have deterred many foreign companies from investing in energy projects in Iran. Data compiled by Bloomberg showed that the country’s crude output, which exceeded 4 million barrels a day in 2008, had declined to 2.69 million a day in February. Oil exports, Iran’s main revenue source, have also dropped by 50 percent as a result of the curbs, according to the Paris-based International Energy Agency.
The U.S. and EU imposed the restrictions because of Iran’s nuclear program, which they claim may conceal efforts to develop atomic weapons technology. Iran insists that it wants nuclear power for civilian use alone.
Iranian diplomats and counterparts from six world powers Thursday ended two days of talks in Vienna that aimed to build on an interim accord offering Iran as much as $7 billion in sanctions relief. They agreed to reconvene in April, and set a July 20 target for a final pact, negotiators said.
Kardan began working three years ago as an investment consultant before receiving an investment banking license in January. With $80 million in shareholder capital, his company runs a $35 million private equity fund specializing in e-commerce, manages fixed-income funds and underwrites debt and equity, Zamani said. Unlike these domestic activities, the company’s Global Energy Fund would seek business from investors overseas, he said.
“We want to partner with European banks and financial institutions and work with them, so we can discuss together opportunities in the oil and gas sector in Iran,” Zamani said. “We also want to look at floating current Iranian companies on an overseas stock exchange.”
The Oil Ministry is redesigning its energy contracts to make them more attractive to international companies, in the event of a removal of sanctions. The ministry has said Iran needs as much as $150 billion in energy investments.
Iran holds the world’s largest gas reserves and belongs to OPEC.