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52 Projects Lined Up for Oil, Gas Majors

52 Projects Lined Up for Oil, Gas Majors52 Projects Lined Up for Oil, Gas Majors

Iran lined up 52 oil and natural gas projects worth an estimated $185 billion for 335 domestic and foreign companies in Tehran, a day after it unveiled its long-in-the-works framework for new oil and gas contracts, known as the Iran Petroleum Contract.

IPC offers more flexible terms on oil price fluctuations and investment risks to make the sector financially attractive.

Oil and gas majors, including Total, Lukoil, Rosneft, Eni, Sinopec, Statoil, Petrobras, Royal Dutch Shell and BP, convened for the two-day event in Tehran in the absence of American companies barred from conducting business with the Persian Gulf country due to sanctions.

The new investment opportunities in upstream oil sector were introduced in three sessions for onshore, offshore and exploration projects. A total of 29 oil projects were unveiled on Sunday, including 21 onshore and eight offshore projects.

In the onshore sector, 12 projects are related to developed fields, also known as "brown fields", while nine are "green field" or underdeveloped projects. Among the offshore projects, five include developed fields and three call for investment in green field projects.

In addition, more than 20 natural gas projects were unveiled on Sunday, of which eight are related to underdeveloped fields.

According to officials, around 75% of crude and 50% of natural gas output come from onshore fields.

Some of the notable development projects presented under the new contractual framework include South Azadegan and Changuleh fields, oil layer of the joint South Pars Gas Field in the Persian Gulf as well as North Pars, Kish, Golshan and Karun gas fields.

Officials say the event is an opportunity to demonstrate Iran's energy market potential rather than a platform to finalize and close deals.

A second conference is scheduled to be held in London on February 22-24 for a thorough presentation of the multibillion-dollar oil and gas projects.

Three projects related to Farzad B, Yadavaran Phase 2 and North Azadegan development were eliminated from the list of available projects for foreign contractors on Saturday and will be tendered in future.

Beside the 50 oil and gas projects due for unveiling on Sunday, Tehran is planning to line up 28 new projects worth $30 billion by January 2016. They include 18 exploration and 10 development projects.

Officials say there will be an open race for the new oil and gas tenders, and Iranian companies will be awarded the projects if they bid higher than their foreign rivals.

  Prospects for Domestic Contractors

Oil Minister Bijan Namdar Zanganeh pledged in a televised interview on Saturday night that more than 60% of Iran's oil and gas projects in the post-sanctions period are to be handed over to domestic contractors.

Pointing to the July 14 nuclear accord between Iran and six world powers, and the prospective lifting of sanctions by early January, Zanganeh said the operational capacity of domestic firms would be "incomparable" in the pre- and post-sanctions period.

"Foreign companies are interested in using the potential of Iranian companies," he said.

Iranian contractors carried $55 billion worth of oil projects between 2011 and 2014, according to an official at the Association of Petroleum Industry Engineering and Construction Companies.

Zanganeh added that one of the prerequisites of the new contracts is the incorporation of domestic firms in new exploration and development projects as a building block to establish major national oil companies.

Elaborating on the terms of IPC, he stressed that if production from oil and gas fields comes to a halt under unanticipated circumstances–for instance, if US or EU sanctions are put back in place—the revenues of foreign contractors will be cut and they will not be reimbursed from any alternative financial source.

A negative political turnaround "would be to the detriment of foreign investors, because they would no longer be able to get a return of capital and we will not pay interest for their blocked revenues" in oil and gas projects, the oil minister said.

Zanganeh on Saturday laid out five major principles for the country's post-sanctions plans in the upstream oil sector, one of which calls for supporting domestic private sector companies in exploration projects to help develop oilfields.

Financialtribune.com