NIOC to Offer 17 Oil Blocks

NIOC to Offer  17 Oil BlocksNIOC to Offer  17 Oil Blocks

Pursuant to recent surveys and explorations, 17 oil blocks have been designated as a priority in the overall exploration blocks, Rahim Nematollahi, head of the exploration blocks and foreign collaboration directorate at the National Iranian Oil Company (NIOC) said at the weekend.

In line with the oil ministry's policy to offer incentives to companies undertaking contracts in exploration blocks, 40 blocks were initially identified of which 17 were specified as having top priority, ISNA reported.

The blocks are selected by the NIOC board of directors and the comparative planning department, and the contractor(s) is liable for exploration risks. "Operating at its own risk and expense, they will not be eligible for compensation if oil/gas is not discovered in commercial volumes at the end of the exploration activities," the news agency quoted the official as saying.

Hydrocarbon exploration is a high risk investment, and risk assessment is important for successful project portfolio management. Exploration is not only technically difficult, it also is fraught with economic risk and contractual uncertainty which can jeopardize investment projects.

Referring to Iran's new energy contracts envisaged later in the year, Nematollahi said incentives are to be provided to encourage contractors. "If exploration operations do not produce positive results, the contractor can carry on with exploration in the adjacent blocks."

The new Iran Petroleum Contract (IPC) aims to attract foreign firms, services, know-how and technology, integrate the exploration, development, and production phases, and reduce investment risks by offering more flexibility in investment costs.

The introduction of the IPC marks a turning point in the way that Iran's oil and gas industry can acquire the much-needed know-how and technology to develop oil and gas fields. It is scheduled to be discussed in London in September.

After introducing the blocks in the initial seminar, interested parties can obtain technical information of a block from the 'Data Room' in the exploration management department of the NIOC. They can study all the relevant data and take notes. They also can purchase data packages of each block, which contains critical information related to preliminary assessments.

After assessing the technical information, companies can submit their commercial and technical proposals. After conclusion of an agreement, companies are required to provide a bank guarantee equivalent to 20 percent of the total contract value.