THE OPPORTUNITIES AHEAD

Iran 2011 | ENERGY | FOCUS: OIL & GAS INVESTMENT

Major investments are planned to boost Iran's oil and gas sector, leaving plenty of room for foreign investors to get a slice of the action.


Over the last decade, developments in the energy market have led to an increased tendency for countries to secure their access to reasonably priced energy supplies. Energy security has become uppermost in the minds of the general public as well as policymakers.

The current high-cost commodity environment has made investments in the energy sector increasingly attractive. It is estimated that investments of nearly $22 trillion in energy infrastructure will be needed to cope with global demand by 2030.

In accordance with the 2025 Vision for the Iranian oil industry, the level of investment required is estimated at $501.52 billion. Average yearly investments of some $25 billion are needed to prepare Iran's energy infrastructure for this competitive age, in which $231.68 billion will be devoted to upstream activities and $269.84 billion will be allocated to downstream investments.

The investment allocated for the upstream oil industry is estimated at $93.93 billion, and $49.78 billion of that is to be sourced from foreign investors. In the upstream gas sector, $137.75 billion in investment is needed, and some $106.74 billion of that is expected to come from foreign investors.

On the other hand, the required investment in the oil refining sector—such as for the construction of refineries and the upgrading of current facilities—will equal $44.25 billion by 2025, with some $15.71 billion coming from foreign sources. In addition, $25.29 billion worth of investment is to be channeled into the gas refining sector, where $17.70 billion will arrive as FDI.

The oil and gas pipeline networks require some $22.29 billion and $55.89 billion in investment respectively, of which $39.12 billion is expected to come from foreign sources.

In order to achieve the planned objectives for all sectors of the oil and gas industry during the Fifth Five-Year Development Plan, $191 billion in investment is needed, with 81% to be channeled into the upstream sector to develop oil and gas fields as well as sustain operational capacity. Furthermore, 56% of upstream development plans will be devoted to improve the production capacity of gas fields.

Planned investments in the refinery sector are estimated at some $12.6 billion, and include the construction of crude oil and condensate refineries, the improvement and optimization of existing refineries, and the upgrading of pipelines and storage tanks.

Finally, the $23 billion investment plan for the downstream natural gas sector is set to enhance refinery capacity and upgrade the pipeline network across Iran.