The new Iran Petroleum Contract (IPC) provides for a flexible formula as to determine share of the profit and terms of the contract, which depends on the field's characteristics and the amount of risks involved, head of Iran's Oil Contract Revision Committee told IRNA.
Incentives are provided in proportion to the risks and costs of the project, Seyed Mehdi Hosseini said, adding that higher rates of profit are envisaged for high-risk oil fields.
The current buyback framework is no longer attractive for foreign companies; thus, the government has established a new model whereby the drawbacks of previous buyback agreements have been revised, creating a new investment model as part of the drive to encourage foreign businesses, particularly from Europe, to invest in Iranian projects.
The IPC aims to attract foreign capital, services, know-how and technology, integrating the exploration, development, and production phases, and reducing investment risks by offering more flexibility in investment costs.
Up to 50 projects valued at $40 billion are to be offered at the London Seminar, in which the IPC is to be unveiled for the first time. Some of the projects pertain to the development of the remaining phases of South Pars gas field, as well as other offshore and onshore gas fields. There are also projects for exploration and development of new fields.
"Development of oilfields in the Persian Gulf has been given higher priority as they would yield production in a shorter run," Hosseini said.
Iran holds the world’s second biggest natural gas reserves after Russia, and the fourth-largest proved crude oil reserves. However, the vast majority of Iran's gas reserves are undeveloped.
