Iran and Saudi Arabia woo foreign investors

Iran and Saudi Arabia, competitors in Middle East politics and global oil markets, have this week stepped up campaigns to win tens of billions of dollars of foreign investment.

Riyadh successfully raised $17.5bn in its first sovereign bond issue. The IMF said last week that the kingdom could seek to get up to $120bn from non-resident investors in the next five years.

The kingdom is expected to raise at least $10bn next year in a further sovereign bond issue and aims to float up to 5 per cent of the shares of Saudi Aramco, the world’s biggest oil producing company, in 2018.

It also plans to invite foreign investors to participate in privatisation deals and PPP projects in different areas of the Saudi economy.

Iran — seeking to restore oil production to levels before nuclear-related sanctions were imposed in 2012 and aiming to increase gas output radically — invited companies to prequalify for contracts to develop 50 oil and gas projects on 19 October.

Deputy Head of the National Iranian Oil Company (NIOC) for Development & Engineering Affairs Gholam-Reza Manouchehri said yesterday that the company needed to invest at least $200bn in the next 10 years and $100bn during the sixth five-year Iranian development plan which began in March.

He said NIOC aims to raise nearly 40 per cent of this amount from foreign investors.

Investors say remaining US sanctions on Iran coupled with Saudi Arabia’s rivalry with the Islamic republic may make it impossible for foreign investors to participate in both markets.

Shell and Total, which both have large investments in Saudi Arabia and other GCC states, have both expressed interest in investing in Iranian energy projects. BP has also signalled it’s desire to participate in Iran’s energy sector.

The battle for foreign investment opens in a front between Iran and Saudi Arabia, the Middle East’s two largest economies. Echoing Riyadh’s criticisms of Tehran, former Qatari prime minister Shaikh Hamed Bin Jassim al-Thani told a conference in London last night that Iran is seeking growing influence in the Middle East region and fomenting political turmoil in Arab states.

For full coverage of Middle East business, see MEED.