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Iran's National Oil Company Inks Deal With Outfit Controlled By Khamenei

Signing of an oil contract in Iran between the National Oil Company and an outfit controlled by Supreme Leader Ali Khamenei. July 11, 2020

An agreement between the National Iranian Oil Company (NIOC) and an organization controlled by Iran’s Supreme Leader was signed today to develop and expand an exisiting oil field.

Shana news agency connected with NIOC reported the deal, without mentioning that the contractor, Persia Oil and Gas Industry Development Company, belongs to Imam’s Executive Headquarters, an organization operating under the control of the Supreme Leader.

Organizations and companies operating under the aegis of the Supreme Leader, the Revolutionary Guard and other regime-connected centers in Iran are not accountable to the parliament or any other institution.

The more than $500 million contract aims at the further development and expansion the North Yaran oil field to increase production by around 39.5 million barrels in ten years. The area is 130 kilometers southwest of Ahvaz, the capital of the oil-rich Khuzestan Province where most of Iran’s oil fields are located.

Since the establishment of the Islamic Republic in 1979, Iran’s relations with Western countries have been tense and it has lagged behind in modernizing its oil production industry. Moreover, its inward-looking economic system is also not hospitable to foreign investors. U.S. and international sanctions have also prevented much needed technology infusion.

In recent years, military and state-controlled front companies have aspired to play a role in the oil industry, but Iran needs tens of billions of dollars in investments and an efficient economic system to be able to modernize the industry.

The contract is not a new deal, but today’s signing ceremony signified the re-formulation of the agreement to correspond with new NIOC contracting format.