By Luke Pachymuthu and Simon Webb – Analysis
Iran sits on the world's second-largest oil and gas reserves, a mouth-watering prospect for international firms starved of access to Middle East fields. But Tehran has not signed a major deal with a large western oil company for years as political pressure over its nuclear program kept them out.
"If you are an energy company, Iran is too big to ignore," energy consultant Mehdi Varzi said. "You want to get involved. But if your government says no, you simply can't."
U.S. President Barack Obama has said he wants a new relationship with Iran, raising the prospect that U.S. oil firms long banned from working in the country may make a comeback.
"Like many people I am very optimistic and hopeful that we have a possibility of something being resolved there," said Jonathan Whitehead, head of commodity sales and structuring for Barclays Capital in Europe, the Middle East and Africa.
"When that happens, how it happens and whether it opens the door for some of these big hydrocarbon-based projects I'm just not really sure."
There is no guarantee the election would result in progress on the nuclear dispute and to sanctions easing, both required by big oil.
Whether the winner is anti-American incumbent Mahmoud Ahmadinejad or his more moderate key rival, former Prime Minister Mirhossein Mousavi, Iran's nuclear policy is controlled by its supreme leader, Ayatollah Ali Khamenei.
"I can't foresee billions of dollars of investment in Iran from Western companies anytime soon… sanctions removal won't happen overnight, regardless of who is elected president," said Julia Nanay, analyst at consultancy PFC Energy.
"And relations could still get more tense and additional pressure could be applied if there is no progress on nuclear discussions."
The United States has accused Iran of seeking to develop a nuclear weapon, while Tehran says it needs nuclear electricity.
HOLDING GAME
Energy firms have for years played a tricky holding game in Iran, aiming to look keen and yet keep the distance required by home governments.
It hasn't always worked. Iran on Wednesday replaced France's Total, which had delayed committing to a multi-billion dollar gas deal, with China's state firm the China National Petroleum Corporation on Wednesday.
In 2006, Iran stripped Japan's INPEX of most of its 75 percent stake in the Azadegan oilfield for moving too slowly on drilling.
Among the companies waiting for conditions to improve are Royal Dutch Shell and Spain's Repsol, which like Total put plans to invest billions in Iran's giant South Pars gas field on hold last year.
Austria's OMV and Norway's StatoilHydro have oilfield investment schemes on hold.
Sanctions have slowed OPEC-member Iran's oil and gas development and the U.S. also put pressure on banks to make financing difficult.
"It has slowed progress and made it more costly for them…," said Al Troner, managing director of Asia Pacific Energy Consulting. "It makes (Iran) go to partners who don't have the expertise needed to execute some of their projects."
Asian companies have stepped into the vacuum left by Western counterparts. But they lack the technology to develop gas export facilities and some of Iran's trickier fields.
Even state-owned Asian energy companies hungry to secure future energy needs and less concerned about Western political opprobrium have been slow to invest, analysts said.
If the U.S. eased the back-room pressure on banks to steer clear of financing energy projects in Iran, that could help the trickle of cash into the energy sector, said Fereidun Fesharaki, head of FACTS Global Energy, which advises companies on refining and marketing strategies.
"It's going to be a small breather," Fesharaki said. "We will go back to where we were two years ago. So the National Iranian Oil Company can borrow money and their projects can bring some capital in, but there won't be a big turnaround."
(Editing by Sue Thomas)
