Gov't Okays New Oil Contracts

Gov't Okays New  Oil Contracts Gov't Okays New  Oil Contracts

In a meeting on Wednesday, the Cabinet approved the framework of the new petroleum contracts, known as Iran Petroleum Contract, due for unveiling in November.

IPC is aimed at accelerating the development of oil and gas fields, making up for underdevelopment in joint fields over the past few years and adopting new, advanced technologies in the energy sector.

Officials say some of the drawbacks of previous oil contracts, such as the terms of the so-called buyback contracts, have been revised. Up to 50 projects valued at $40 billion are to be presented, Shana reported.

Rokneddin Javadi, managing director of National Iranian Oil Company, said American companies can participate in an oil conference in Tehran in which the IPC will be presented for the first time.

"We do not know for sure if they (Americans) will attend the conference," Javadi said, without ruling out the possibility.

"Cooperation with American companies through these contracts is feasible … From the government standpoint, there is no restriction for them" to come to Tehran, Javadi was quoted as saying on Wednesday.

He also said the Tehran conference is poised to get a big international welcome, as many major foreign oil and gas companies are reopening offices and plan to resume operations in the Persian Gulf country.

Iran will lift the curtain on the framework of its long-awaited multibillion-dollar oil contracts in November before a full-fledged unveiling in London in early 2016.

According to reports, the new energy deals will require foreign contractors to finance the heavy costs of exploring the less-developed Iranian oilfields, and in return, the contractors would make revenues from the fields' output under a joint venture with the Islamic Republic.

  Nuclear Turnaround

Iran and six world powers reached a historic deal on July 14 in Vienna, which would limit the country’s nuclear program in return for removing sanctions on its energy and financial industries.

Shortly after, Iranian officials said the doors are open for western companies, including Americans, to compete for tens of billions of dollars in economic and energy contracts.

Oil Minister Bijan Namdar Zanganeh  also said the ministry "will prepare the grounds for the presence of American oil companies in Iran."

The US-led sanctions against Iran to curb its nuclear program gradually pushed many western firms out of the Persian Gulf country over the past decade, with European Union sanctions in 2010 causing a further exodus.

US executives and trade groups worry that even after the lifting of sanctions, American companies may be left out in the cold, as European and Asian rivals move into the country's lucrative market, unless there is Congressional action to relax the rules.

According to Amir Ali Handjani, an Iranian-American energy executive, “second- and third-tier” US companies could start Iran operations ahead of American energy giants.

Tehran has hosted top trade delegations from Spain, France, the Netherlands, Austria, Spain and Germany in the past few weeks, preparing multibillion-dollar agreements in economic and energy sectors for the post-sanctions period.

  Historic Opportunity

The nuclear accord, also known as the Joint Comprehensive Plan of Action, is a "historic opportunity" for Iran, particularly for the country's oil industry, an official at the Tehran Chamber of Commerce said on Wednesday.

"Investment opportunities in the oil, gas and petrochemical industries account for $120 billion," Majidreza Hariri said. "Upon the removal of sanctions and presence of foreign investors, development of these industries will accelerate."

Hariri added that Iran's crude exports, and consequently oil revenues, will rise in the post-sanctions era, but "it cannot be achieved in the short run."

Iran plans to produce up to 3.9 million barrels of oil a day by March, with output rising by 500,000 barrels a day soon after sanctions are lifted and by 1 million barrels within the following five months.

An Iranian official said the country will realize its short-term 500,000-bpd milestone by late November or early December even before the sanctions are lifted.