Iran Infrastructure upgrades

For the first time since the 1979 Islamic Revolution, Iran is set to allow foreign banks to establish branches in the country and engage in normal banking operations.

According to Presstv, Article 44 of the Constitution had heretofore placed banking activities exclusively in the hands of government. In tandem with the Law on Usury Free Banking Operations, these two measures effectively blocked foreign banking operations from conducting business in the mainland.

A handful of foreign bank branches and representative offices extant in the country were allowed to undertake administrative and coordinative activities but were not permitted to open customer accounts, receive deposits or extend normative facilities. Foreign banks, under special conditions, were allowed to function in the free zones.

With the long-awaited privatization law having already come into force in the summer of 2008, allowing the normal functioning of foreign banks in Iran is viewed as a major economy boosting initiative by the Central Bank of Iran (CBI).

Under the new circumstances, four US banks, including Citibank and Goldman Sachs, have applied for opening a branch in Iran. The banks made a formal request to the CBI to establish a branch.

TOKYO (AFP) - – Japanese oil developer Inpex Corp. said Friday it would withdraw from Iran's Azadegan oil field project, a move believed to be aimed at keeping it off a list of firms subject to US sanctions.

Inpex "has reached an agreement with Iran's state oil company that its subsidiary will withdraw from the Azadegan oilfield development project," the Japanese government-backed company said in a statement.

The oilfield, which has about 42 billion barrels of oil, was initially to have been developed with Inpex. But the Japanese company in 2006 lowered its stake from 75 percent to 10 percent due to worries about the risk of sanctions imposed on Iran over its controversial nuclear programme.

The Japanese pullout is aimed at avoiding Inpex's inclusion on a list of companies subject to US sanctions against Iran, local media including the Nikkei business daily have reported, citing government sources.

Inpex did not refer to US sanctions as a reason for the withdrawal. Spokesman Kazuya Honda only said the company had "consulted with the government since it imposed its own sanctions on Iran.

"The company then made the decision after studying the business environment comprehensively."

But analysts said the Iranian project "was never particularly attractive" to the Japanese firm.

"Azadegan as a Japan 'development' project has been dead for more than four years," said Ben Wedmore, a commodities analyst at MF Global. "It was merely a matter of time before the last 10 percent was allowed to go."

"I think the recent announcement of US sanctions being imposed is a very convenient excuse for Inpex to leave the project completely."