Report: Post-sanctions Iran still tricky

Military entities tied to Iran's economy may present investment roadblocks.
By Daniel J. Graeber  |  Sept. 21, 2015 at 9:08 AM
share with facebook
share with twitter
| License Photo

BATH, England, Sept. 21 (UPI) -- Western investors looking to capitalize on easing sanctions pressure on Iran's energy sector should exercise a degree of caution, analysis finds.

Iran's economy emerged from recession in December. Finance Minister Ali Tayebnia said the momentum should continue into 2015 as sanctions pressures ease in response to a July nuclear agreement reached with the five permanent members of the U.N. Security Council, plus Germany.

Sanctions imposed on Iran's energy sector curb the country's ability to generate revenue from oil and gas sales. The Central Bank of Iran, however, said a nine-month growth rate of 3.6 percent represents an increase of $54 billion for the nation's economy.

With more of its oil expected back in the global market, Iranian President Hassan Rouhani said he was cautious nonetheless about a petroleum-dependent economy.

A report published Monday from analysis firm Verisk Maplecroft said the conservative Islamic Revolutionary Guard Corps holds a de facto majority control over the economy. That could throttle some post-sanctions investment opportunities.

"The lifting of oil and financial sanctions does not necessarily provide a panacea for Iran's economy as Rouhani's efforts to provide more business-friendly economy will be challenged by the country's hardliners," Prashant Sawant, senior economist for the firm, said in a statement. "Under these circumstances, Western investors will maintain a cautious optimism about future investments in Iran."

Iran is vetting interest from European energy companies examining the post-sanctions options in the country. European sanctions are easing in the wake of a breakthrough July nuclear agreement.

U.S. supermajor Chevron said U.S. sanctions prohibit the company from following its European counterparts into Iran.

Sawant said that even if energy sanctions ease some companies may still face difficult as military entities tied to the IRGC will remain blacklisted, adding a layer of complexity for companies looking to move into the Iranian market.

The Organization of Petroleum Exporting Countries said in a monthly newsletter Iran is expected to start up dozens of oil and gas projects, worth an estimated $185 billion, by the end of the year.

Related UPI Stories
Trending Stories