Oil Ministry to Revise Contracting Procedures

Oil Ministry to Revise Contracting Procedures
Oil Ministry to Revise Contracting Procedures

To improve implementation of oil projects, the oil ministry needs to sign contracts directly with subcontractors after tendering, the deputy for engineering affairs at the oil ministry said, IRNA reported.

Seyyed Emad Hosseini said, "There have been concerns about the way that oil projects were allocated in the past, with certain companies winning without bidding as part of the formal tendering process."

There are Iranian companies who can be relied upon to take on engineering, procurement and construction (EPC) projects, said Hosseini, but unfortunately there are several instances where semi-government organizations have been awarded such projects, only to allocate them to subcontractors.

Although it is specified in the oil ministry's bylaws that tenders must be held for oil projects with competitive bids, several companies have secured oil projects in the past without submitting bids.

The ministry aims to give contractors an equal chance to compete and award projects to the most competent companies, while looking to dismiss incompetent companies who landed major oil projects without tenders.

Under an EPC contract, the contractor designs the installation, procures the necessary materials and builds the project.

Hosseini insisted that despite the ministry's authority to award projects in joint oil and gas fields without tenders, projects will invariably be allocated via tenders.

"Unfortunately, a lack of general contractors such as Shell or Total is evident in the oil industry, but we are preparing the ground to invite such contractors."

There have been attempts in the past to turn petrochemical companies, such as Petropars or the MAPNA Group, into general contractors. However, despite their "major contribution to the oil industry," such companies did not become general contractors by international standards and continued to operate under the EPC scheme, according to Hosseini.