The Ministry of Oil’s roadmap for attracting public and private investment

According to Energy Press, on the eve of the 47th anniversary of the victory of the Islamic Revolution and coinciding with the year that has been decorated with the name “Investment for Production”, the Iranian oil industry is creating a new narrative of attracting and directing capital to the beating heart of the national economy.
The 14th government, believing in the unique role of public participation and the private sector, has taken long and structural steps to break the historical lock on financing and accelerate the implementation of major projects.

This report is a review of the most important measures and innovative tools that the Ministry of Oil has designed and implemented to attract and utilize private and non-governmental investment capacity in the field of energy production and management.

Developing a methodology for financing upstream contracts

To facilitate investor participation in upstream oil and gas projects, the National Iranian Oil Company has designed a set of new financial tools in the methodology for financing upstream contracts. “Payment Commitment Certificate”, “Crude Oil Remittance” and “Crude Oil and Gas Condensate-Based Commodity Deposit Certificate” are tools that not only reduce the cost of financing for investors, but also ensure their liquidity and flexibility by being able to be collateralized in financial institutions and the capital market.

The unified instructions for implementing these certificates were also prepared immediately after the notification of the guidelines, and so far two active companies have used this capacity to advance projects based on their field development contracts, and the process of financing the relevant projects is underway.

Establishment of specialized financial institutions

To create greater security and attractiveness in financing, the “Oil Industry Guarantee Fund” has been established with an initial capital of 300 million euros and the participation of 20 partners including banks, exploration and production companies, the National Development Fund and the Energy Exchange. This fund will support oil industry projects with an independent mechanism. The fund’s articles of association and partnership agreement have been approved, and arrangements have been made for issuing guarantees to shareholders.

Also, based on the capacities of the Seventh National Development Plan Law (Articles 12 and 14), the establishment of a “project company” to attract small capital and public participation was put on the agenda. A concrete example of this is the “MAPNA Oil and Gas Development Company”, which is in the process of being established and registered on the stock exchange to implement the Qale-Nar, Kabud, and Balaroud fields processing project with an investment of $102 million.