News / Economy

Iran says ‘no money’ for key oil projects

Monday, 16 February 2015 2:31 PM [ Last Update: Monday, 16 February 2015 2:31 PM ]

Iran says lacks enough budget to develop crucial oil fields.

Iran’s Minister of Petroleum Bijan Namdar Zangeneh has described the current status of Iran’s oil industry as “catastrophic”, saying his Ministry of Petroleum lacks adequate funds to even pay the salaries of its staff.

Zangeneh told lawmakers in a speech at the Parliament’s open session on Monday that the falling international oil prices have drained the MoP revenues to an extent that no cash is currently available for the oil industry’s crucial investments.

“By considering the current status, there is no adequate budget to invest in the shared fields,” he said in his speech before a Parliament vote on a key clause on funding oil projects in the budget bill for the next Iranian calendar year (to start 21 March 2015).

“The MoP has come across problems in paying the salaries of its own staff let alone making investments in shared fields”.

The clause in question envisages allocating $4.8 billion from the National Development Fund (NDF) for the development of shared fields.

“The current situation of the oil industry is catastrophic,” Zangeneh warned the MPs. “If this clause is not approved, we will fall into a real crisis”.

Iran has already announced that it needs investments for the development of a series of oil fields that it shares with Iraq. The fields – several of which are situated on the western banks of the Karoun river in the oil-rich Khuzestan province – are expected to increase Iran’s total crude oil production by 1 million barrels per day (m/bpd) once fully developed.

Zangeneh emphasized that allocating $4.8 billion from NDF for shared oil fields has already been coordinated with officials in charge of the Fund.

“The most justified target for spending the NDF resources is the oil industry,” Zangeneh said. “If the oil resources are damaged, the NDF will also be lost.”

He said the MoP cannot obtain loans from international lenders for Iran’s oil projects and will have to rely on domestic resources such as the NDF to fund the development of oil projects.

The clause eventually failed to get enough votes from the MPs and was accordingly forwarded to a Joint Committee for further discussions and amendments.

Under a series of draconian US-led sanctions imposed against Iran, international banks are banned from awarding loans to Tehran for its investment projects.

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