Page 25 - Aruba Today

BUSINESS A25
Monday 30 November 2015

Is Portugal about to go down Iran lures foreign investors with oil contracts

the same road Greece is on? ALI DAREINI ence in Tehran that began stitutional”, saying they will
Associated Press Saturday. Iran will pay for- open the way for “infiltra-
BARRY HATTON TEHRAN, Iran (AP) — Iran eign oil companies larger tion” of the energy sector
Associated Press unveiled a new model fees under the new con- by Iran’s enemies.
LISBON, Portugal (AP) — An anti-austerity alliance of oil contracts Saturday tracts to provide greater “Zanganeh today unveiled
including radical leftist parties takes power. A shaky aimed at attracting foreign incentives to investors. contracts that effectively
economy and huge debts menace the national investment once sanctions Oil Minister Bijan Namdar transfers the rights of explo-
economy. The rest of Europe watches with a wary are lifted under a landmark Zanganeh told the confer- ration, extraction, exploita-
eye. nuclear deal reached ear- ence that under the new tion and sale Iran’s oil to
Sound familiar? It’s not Greece, but another euro- lier this year, and said U.S. contracts, foreign investors foreign companies for 25
zone country: Portugal. companies would be wel- will be required to form a years,” the conservative
A nation that just months ago was hailed as an ex- come to participate. joint company with an Ira- news website, rejanews.
ample of how to follow through with budget austerity The new Iran Petroleum nian partner to carry out com, said.
measures has become a new source of concern in Contract replaces a pre- exploration, development International sanctions on
Europe. vious buyback model, in and production opera- Iran’s oil industry were tight-
A left-wing coalition has unseated a center-right which contractors paid to tions. ened in 2012 over its con-
government that introduced the deep spending cuts develop and operate an “To continue to play the troversial nuclear program.
and steep tax hikes demanded since 2011 by credi- oil field before turning it role (as a major oil suppli- Western nations have long
tors during Portugal’s 78 billion-euro ($82.6 billion) over to Iranian authorities. er), we hope to enjoy work- suspected Iran of secretly
bailout.
The developments echo what happened in Greece, Participants listen to a speaker during Iran Petroleum Contracts Conference in Tehran, Iran,
whose radical leaders this year almost crashed the
nation out of the eurozone. Saturday, Nov. 28, 2015. Iran has unveiled a new model of oil contracts aimed at attracting
Led by the moderate Socialist Party, which took of-
fice Thursday, Portugal’s new administration will be foreign investment once sanctions are lifted under a landmark nuclear deal reached earlier this
backed in Parliament by the Communist Party and
the radical Left Bloc and Green Party. year. Portraits of the late Iranian revolutionary founder Ayatollah Khomeini, left, and Supreme
Their rise and rhetoric bring to mind the radical Syriza
party in Greece and its dramatic clashes this year with leader Ayatollah Ali Khamenei hang on the wall. (AP Photo/Vahid Salemi)
its eurozone creditors. Syriza initially refused to agree
to more budget cuts and the creditors responded by Iran has sweetened the ing with reputable interna- pursuing nuclear weap-
almost pushing Greece out of the euro. terms, hoping to bring in tional oil companies under ons, charges denied by
The new government in Lisbon — the country’s sec- $30 billion in new invest- a win-win situation,” he told Tehran, which insists the
ond-largest ever, with 17 ministers and 41 deputy ment. The new contracts the conference. program is entirely peace-
ministers — is taking up a similar battle cry, vowing last 15-20 years and allow Zanganeh welcomed U.S. ful. Under the agreement
to “turn the page” on austerity, which Germany has for the full recovery of costs. investment in Iran’s energy reached in July with the
championed for years to reduce high debts despite The older contracts were sector. “We have no objec- U.S., Britain, France, Ger-
the economic hardship it can create. That kind of re- shorter term, and investors tion to and problem with many, Russia and China,
belliousness alarms investors, who like predictability. complained of heavy risks the participation of Ameri- Iran will curb its nuclear
Greece and Portugal each represent less than 2 per- and suffering losses. can companies. The way activities in exchange for
cent of the eurozone’s gross domestic product, but Investors who produced for the presence of these the lifting of sanctions. Oil
their troubles can re-ignite market fears about the more than planned companies in Iran’s oil in- Ministry officials said 137
bloc’s financial well-being. amounts received no com- dustry is open,” he said. foreign companies attend-
Analysts at Barclays Research said in a note Wednes- pensation for the addi- Mahdi Hosseini, a senior of- ed Saturday’s conference,
day that Portugal’s sovereign borrowing costs are set tional barrels. But under the ficial in charge of the new including Repsol, BP, Royal
to edge higher as concerns about government sta- new model, the more they contracts, told the confer- Dutch Shell, Total, Technip,
bility make it “likely that the market will continue to produce, the more they ence that the new model is Schlumberger, Eni, Enel,
demand some political risk premium.” will earn. Foreign investors an attempt to repair Iran’s Rosneft, Lukoil, Gazprom,
The people of Portugal and Greece have both been will also have an option to relations with the industri- Inpex, Statoil and Daewoo.
hit hard by years of budget cutbacks. extend contracts an ad- alized world. Iran is hoping Iran, an OPEC member,
Greeks have struggled with a surge in poverty and ditional five years, up to 25 to attract over $150 billion currently exports 1.1 million
unemployment, with an election last January bring- years. in foreign investment in five barrels of crude oil per day
ing to power left-wing Prime Minister Alexis Tsipras and Some 50 upstream oil, gas years to rebuild its energy and hopes to get back to
his Syriza party. and petrochemical proj- industry. Iranian hardliners, its pre-sanctions level of
Tsipras clashed with creditors over the austerity, al- ects are being introduced however, condemned the 2.2 million, last reached in
most bringing Greece out of the euro. Since then, during a two-day confer- new contracts as “uncon- 2012.q
Tsipras has had to reverse course. He has accepted
the creditors’ demand for tax hikes and dramatic
cuts in pensions and spending in return for a new 86
billion-euro bailout.
In Portugal, a similar anti-austerity backlash was pre-
dictable in a general election last month when an-
ti-austerity parties together collected more than 60
percent of the vote.
Like Tsipras, Portugal’s incoming Socialist prime min-
ister Antonio Costa’s first call is to scale back on the
austerity. He intends to reverse cuts in government
workers’ pay and unblock pension increases from
Jan. 1, as well as ease the tax burden. That, he says,
will put more money in Portuguese pockets and fire
up the economy.q