Iran
- introduction
Iran
Iran's local content regime is determined to a great extent by its international
isolation and its ideology of 'revolutionary' opposition to the West. Inviting
foreign oil majors to harvest the country's natural resources is, therefore,
uncommon. When foreign oil companies are granted production or exploration rights, the local content requirements are
usually very stringent.
In part, this is to prevent the country's oil wealth being exploited (or
accusations of the government allowing the same), but it is principally to
develop
Iran's human capacity and to advance its technological know-how. This will
enable
Tehran to support their grand claims of indigenous capability and to bolster
the
policy, induced partly by international sanctions, of autarchy.
The tight local content restrictions, frustrating for IOCs, should, therefore,
be viewed as part of the Iranian government's long-term strategic goals. This
commitment to building local capacity should be viewed positively by IOCs; in
the
long term, it will increase the number of skilled workers and acceptable local
partners.
That said, it is hard to persuade IOCs of the benefits of Tehran's tight
regulations when their projects are delayed by Iranian complaints, or when the
National
Iranian Oil Company (NIOC) threatens to penalise them for failing to meet local
content requirements.