The Non-Governmental Oil Industry Guarantee Fund will be established with the principle approval of the National Financial Supply Council, chaired by Hamid Bord, the CEO of the National Iranian Oil Company. This fund is designed as one of the important initiatives of the National Iranian Oil Company to remove the obstacles to financing upstream oil and gas projects.
Objectives and Features of the Guarantee Fund
The Non-Governmental Oil Industry Guarantee Fund will be launched with a capital of 300 million euros, and its main objective is to facilitate the provision of collateral and guarantees required by Iranian companies. Studies show that the problems in securing the guarantees needed by banks and financial institutions are one of the main obstacles to mobilizing financial resources for the implementation of developmental projects in the oil industry.
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Composition of Shareholders and Investment
This fund will be established with the participation of 20 shareholders, including five commercial banks in the country, 10 Iranian exploration and production companies, the National Development Fund, the National Iranian Oil Company, the Iran Energy Exchange, and the Kish Free Zone Organization. Banks and exploration and production companies will provide the majority of the fund's capital, which indicates the importance of private sector participation in financing oil projects.
Given that Iranian exploration and production companies have taken on a larger role in the development and operation of oil and gas fields, improving access to financial resources and the ability to provide credible guarantees to banks and financial institutions has become one of the main requirements for investment in the oil industry. The Non-Governmental Oil Industry Guarantee Fund is an institutional response to this need and a complement in the financial supply chain for upstream projects.
The anticipated scope of activity for the fund includes issuing various types of guarantees required by the oil and gas industry. These guarantees include payment commitments, participation in tenders and auctions, performance guarantees, and foreign financing guarantees. This fund will benefit investor companies and contractors active in the oil, gas, and petrochemical sectors, and banks and financial institutions can also benefit from the capacity of the issued guarantees.
The establishment of this fund and obtaining its principle approval is an important step in completing the process of launching this specialized institution and providing modern infrastructure for financing the oil industry.
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