Iran has lined up 45 oil and gas projects to show international companies at a conference in London in December.
The projects, including oil and gas exploration, will be discussed along with details of a new oil contract model at the Dec. 14-16 conference, Mehdi Hosseini, chairman of Iran’s Oil Contracts Restructuring Committee, said in an interview in Tehran.
The new oil contract models will be discussed ahead of exploration auctions to double the country’s crude output.
The Persian Gulf nation’s output was 2.85 million barrels a day in July, according to estimates compiled by Bloomberg. Oil producers such as BP Plc and Royal Dutch Shell Plc have expressed interest in developing Iran’s reserves, the world’s fourth-biggest, when sanctions are removed.
“We will define projects in the oil and gas sector as much as feasible and necessary since we believe this sector will bring wealth and economic development,” Hosseini said. “As far as this conference is concerned, we have defined around 45 projects that include exploratory blocs at varying development costs.”
Iran may give companies two to three months to decide whether to bid on the projects. The exact length will be decided by the time of the conference. Shortly after that, Iran will call for bids.
“We have consulted with almost all medium and major oil companies over our contractual contents and projects. And the feedbacks have been positive,” he said.
New Risk Service Contract
Hosseini said Iran will adopt “risk service contract” models that will offer investors payback in the form of cash or oil allocation without ceding ownership of the country’s energy reserves.
“They would resemble production sharing but with different characteristics. The international oil company, or the investing company, would be accepting certain risks in view of which it would be entitled to a portion of the oil thus produced. Or the reward of that risk is a share/portion of the oil,” he said. Hosseini said Iran’s production costs are $8 to $10 a barrel so “our projects will be attractive to investors”.
"Falling oil prices are in Iran’s interest at this point, because high prices encouraged uneconomical fields," he said.
“The drop in prices from $100 a barrel to around $50 a barrel now is only in the short run. Looking at the international oil industry over the long run, the demand will rise and so will the prices.”
