Welcome Mat in Iran

Oil-rich Iran, long regarding foreign interest in its black wealth with suspicion, last week put out the welcome mat and declared open house for all comers. After two days of debate, the Majlis (the lower house of Parliament) passed a new law that opens up vast new areas of Iran for oil exploration and development under surprisingly favorable terms for foreign investors.

The terms were surprising because only a few months ago Iran demanded a 75-25 profit split from interested Italian investors v. the 50-50 split that is general in the Middle East. Parliament was preparing to write the new terms into law when the Shah intervened. Realizing that the new terms would discourage foreign money and know-how, he put his weight behind a new, more liberal law containing a 50-50 provision, plus other favorable provisions for foreign investors, e.g., a liberal write-off of expenses before profits are figured.

The new law opens up all Iran outside the older Persian Gulf fields--now being developed by a consortium of British, Dutch, French and 14 U.S. oil firms. For exploration, the land will be divided into blocks of some 80,000 sq. kil., with an unspecified third of the area held in reserve for future exploitation. It will allow foreign companies either to share the costs of exploration and development with the state-owned National Iranian Oil Co., or go it alone; in either case NIOC will take at least half the profits. Among the areas opened up: the fabulous Qum oilfield in central Iran (TIME, May 6).

The best example of how Iranian attitudes have changed since the xenophobic days of Premier Mossadegh is a provision allowing the Shah and NIOC to negotiate directly with foreign firms without the preliminary wrangling in the Majlis that discouraged many a prospective investor in the past. With the new law several U.S. oil firms, plus Japanese and Italian companies, are expected to try their luck soon in Iran's oil-promising interior.

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