We use cookies to give you the best possible experience on our website. By continuing to browse this site or by choosing to close this message, you give consent for cookies to be used. For more details please read our Cookie Policy.

ITE Transport and Logistics

Why Iran?

With a population of 77 million, a $400 billion economy, and a self-sufficient industrial base desperate to enter global markets, Iran’s return is the biggest opening of a new market since the fall of the Soviet Union. Time will tell how the re-entry will go, but the opportunities for first movers are undeniable – particularly in the oil, rail, ports and transport sectors. Here, we look at the 4 factors that make Iran a market you cannot afford to ignore.

Iran needs massive infrastructure spending and development

Iran needs $15 billion of investment in infrastructure projects each year to develop export capacity and modernise the transport sector, senior government minister Abbas Akhoundi told foreign investors in Tehran this month. Funds are needed across the board, from railways – $25 billion is needed to increase Iran Railway’s network from 15,000 km to 25,000 km – to civil aviation, where an average fleet age of 27 years has created such a great business opportunity that the American giant Boeing has been given special permission to do business with Tehran.

Iran has the cash to invest

But while ministers are picking their options for where to source their infrastructure investment, Iran is by no means holding out the begging bowl. One of the most crippling element of the sanctions placed on Iran was a ban on transferring money in or out of the country – and more importantly, billions of dollars in oil revenues held by Iran were frozen, sitting uselessly in foreign banks. Now, as relations with the outside world thaw, so does the frozen money – meaning Iran, unlike Russia in the 1990s, is not short of ready cash to fund improvements and pay international suppliers.

Iran’s oil exports coming back on stream

The oil and gas industry has never been shy in entering new markets, so Iran can expect a rush of international drillers, oil service companies, and oil transportation specialists in the comping years. Even at today’s depressed oil prices Iran has the reserves and production capacity to produce and export oil at a healthy profit, and the chance to grab market share at the expense of Saudi Arabia is too good to turn down.

This has resulted in an official aim to boost exports by at least 500,000 barrels in the next few months, and foreign companies are benefiting from the investment that will make this happen. Saipem, the Italian oilfield services provider, has signed two Memoranda of Understanding to work on refinery upgrades and 1,800 km of pipeline projects – the contract will be worth over $5 billion. On the oil production side, the unpopular ‘buyback’ deals between Iran and foreign producers, where the international firm develops the field before giving it back to the Iranian government, could be shelved in favour of long-term contracts that are more investor-friendly.

Iran is looking abroad for new technologies and services

In just four days in January, Iran’s President Hassan Rouhani signed deals worth up to $22 billion with European companies. Chief among them were carmakers – the auto industry is Iran’s biggest economic sector after oil and gas, but sanctions have slowed down the sector as local plants have not been able to import enough parts and machinery, the Financial Times reported. With executives from Peugeot (which took 12% of its sales from Iran before sanctions started to bite, according to Bloomberg), Geely Automobile, carmakers already having visited Tehran to thrash out deals, bringing Iran’s auto industry back to its former glories is going to be a goldmine for exporters.

Back to Iran sector hub


Related Events

Get in Touch

Want news like this in your inbox?