5 Mega Oil, Gas Deals by 2017

5 Mega Oil, Gas Deals by 20175 Mega Oil, Gas Deals by 2017

Iran could sign five major deals with foreign contractors to develop its oil and gas fields in the post-sanctions period before President Hassan Rouhani's first term in office comes to an end by mid-2017, Deputy Oil Minister Rokneddin Javadi said.

"There is a long way to go from presentation [of oil and gas projects] to signing deals … But we hope that a minimum of four or five contracts will be finalized by the end of the 11th [incumbent] government," Javadi was quoted as saying by Mehr News Agency on Friday.

The Persian Gulf country is planning to unveil up to 50 oil and gas projects under the revised framework of its long-anticipated new oil contract, officially known as Iran Petroleum Contract or IPC, in a conference later this month. Javadi said the conference, which is expected to bring together major international oil and gas companies in Tehran, will be an opportunity to show Iran's energy market potential rather than a platform to finalize deals.

Of those 50 projects, around 20 will include discovery and exploration, while 30 projects are designed to boost extraction from oil and gas fields by implementing enhanced oil recovery techniques. Iranian oil officials say Tehran has sweetened the terms of the new contracts to attract billions of dollars in foreign direct investment. It has also revised some of the drawbacks of previous oil deals, such as the terms of the buyback contracts.

  Distinguishing Factor

"The new contracts will require foreign companies to stay in Iran for 15-20 years after the completion of projects, a distinguishing factor for new contracts, as part of the contractors' income will be bound to revenues generated from the same projects, such as sales from a developed oilfield," Javadi said. He added that the new contracts are a type of "services agreement" where the seller provides a service to the buyer.

Major international oil and gas companies abandoned operations in Iran after the US and the European Union introduced trade and financial restrictions against the Islamic Republic in 2011 to curb its nuclear program. But the Iranian government has made it a top priority to adopt foreign technology and services to make up for years of underdevelopment in the energy sector.

Iran and six world powers reached a historic deal on July 14 in Vienna that would limit the country’s nuclear program in return for removing sanctions on its energy and financial industries. The official said prominent international oil and gas companies will arrive in Tehran for the IPC conference before a full-fledged unveiling on February 22-24 in London. However, he said American firms are unlikely to attend despite calls by government officials that all companies, including US firms, can attend the November conference.