US Oil Giants to Be Represented in IPC Confab

US Oil Giants to Be Represented in IPC ConfabUS Oil Giants to Be Represented in IPC Confab

American oil giants will not be able to attend the Iran Petroleum Contract Conference in Tehran on November 28-29, the Oil Ministry's deputy for international affairs said on Saturday.

"Due to tight constraints imposed by congressional rules on the US oil companies, they will have no chance of participating in the Tehran conference directly," Amirhossein Zamaninia was quoted as saying by IRNA. "There are intense speculations that the representatives of these companies will stand in for them indirectly."

Pointing to the high importance of the conference, Zamaninia added that international oil enterprises are fully aware of Iran's untapped hydrocarbon reserves, which explains why they do not want to miss the opportunity of attending the conference.

The official noted that Iran is slated to unveil its new oil contracts in a conference in Tehran next month before a full-fledged unveiling in London on February 22-24.

Officials say Tehran has sweetened the terms of the new contracts to attract billions of dollars in foreign direct investment for up to 50 oil exploration and production projects.

According to Seyyed Mehdi Hosseini, head of Oil Contracts Revision Committee at the National Iranian Oil Company, the conference will host a large number of major foreign and local companies, academic figures and economic experts in Tehran.

The new model, known as IPC, aims to attract foreign capital, services, knowhow and technology, integrate the exploration, development and production phases, and reduce the investment risks by offering more flexibility in investment mechanisms. In addition to demonstrating the Oil Ministry's priorities in investment deals, the two-day event will highlight the performance and activities of the oil industry and provide details to Iranian and foreign investors.

The IPC proposes conditions “similar to the tried and tested production-sharing agreements in the UAE and Iraqi Kurdistan”, according to Adrian Creed and Amir Kordvani of the London-based Clyde & Co. law firm.

Firstly, there will be no specified rate of return on invested capital in the IPC, according to Hosseini.

Both the NIOC and the contractor will estimate the rate and investment will begin after consensus over the rate of return is reached. Unlike the short expiry of the buybacks, the IPC model will offer extended contract duration of 20-25 years, allowing for much longer cost recovery after first production. This would allow foreign companies a greater level of certainty and incentive to invest large sums. "In the IPC model, foreign contractors will be equally involved in production and recovery phases," said Dr. Mehdi Montazer, a professor of law and legal expert in oil and gas contracts.

"The new contracts will allow investors to be involved in production, giving them far greater control and certainty over long-term revenue, while foreign ownership of oil resources is barred."