Iran "Racing to Seal Deals" with Oil Giants Before Trump Takes Possible Action Against the Islamic State

BP has reportedly declined to bid on Iranian oil and gas projects for the time being.

Just as Organization of the Petroleum Exporting Countries (OPEC) members hunker down to enact the oil production cutbacks they agreed to under the cartel's reduction agreement, Iran too is hunkering down – with 29 companies from over a dozen countries that will bid for oil and gas projects and presumably achieve the Islamic republic's long-promised goal of boosting output and fully recovering on the international market.

The list of firms Iran has deemed "qualified and credible" under its new, less restrictive Iran Petroleum Contract (IPC) model includes Shell, France's Total, Italy's Eni, Malaysia's Petronas, and Russia's Gazprom and Lukoil, as well as companies from China, Austria, Japan, and other countries.

They will take part in a licensing round for up to 50 exploration and production blocs, due to take place early this year - part of Iran's overall goal to attract $200 billion in oil and gas investment over the next five years.

ONGC Videsh Ltd., the overseas arm of state-owned Oil and Natural Gas Corp, is also on the list; in 2008 it discovered the Farzad-B gas field in the Persian Gulf's Farsi block, which has an in-place gas reserve of 21.7 trillion cubic feet, of which 12.5 tcf are recoverable.

But the imminent swearing in of Donald Trump as the next U.S. president has supposedly caused one notable player to absent itself from the contender's pool: BP, whose corporate roots date back to the Anglo-Persian Oil Company responsible for the first Iranian oil discovery in 1908, has not applied to take part in the tender of exploration and production rights.

According to people briefed on the matter, the decision is mainly commercial: "It's a question of where the best returns on investment can be made and BP has plenty of attractive opportunities elsewhere," one source told The Financial Times.

However, the sources also admitted that the prospects of a hard line stance against Tehran by the Trump administration is a significant deterrent for the oil giant; indeed, the Financial Times portrays Iran as "racing to seal deals before Barack Obama steps down as US president this month."

The new IPC is widely credited for attracting so many top-ranking oil firms: it ends a 20 year old buy-back system under which Iran did not allow foreign firms to book reserves or take equity stakes in Iranian companies.

Jason Rosychuk, an oil and gas specialist at Pinsent Masons, says that after a slow start, Iran's much-needed investment drive to upgrade its production infrastructure and increase output is gaining momentum: "The level of interest is high; all companies are taking a look."

Strictly in terms of its ability to negotiate with outsiders, Iran's effort to reestablish itself on the international market is impressive, and arguably its biggest move to date came in July of last year, when it announced it was in talks with Japan's Mitsui Chemicals and France's Total to attract $60 billion in foreign investment.