Zanganeh: Draft Oil Contracts Need Revisions

Zanganeh: Draft Oil Contracts Need Revisions
Zanganeh: Draft Oil Contracts Need Revisions

The new Iran Petroleum Contracts, designed to attract billions of dollars in foreign investment for its energy industry, need revisions and the government is confident the first deals will be signed within months, Oil Minister Bijan Namdar Zanganeh said.

Regulators in Iran and the country’s Oil Ministry reached “partial consensus” on language in contracts that were sent to the government’s Cabinet for approval two weeks ago, Zanganeh said in an interview, Bloomberg reported.

Zanganeh dismissed suggestions the contracts had been delayed, saying “Signing oil contracts takes time. It needs negotiation.”

He said he expected the first contract with a foreign company to be signed “in the next two or three months or maybe sooner".

With economic sanctions lifted in January after Iran pledged to use its nuclear program for peaceful purposes, the government is hoping to draw as much as $50 billion of foreign investment a year from major oil companies such as Italy’s Eni SpA and France’s Total SA. The Oil Ministry spent the past two years on a new model contract.

Zanganeh said the changes in contract language so far involve mostly “legal issues”.

The ministry removed a clause that would let the National Iranian Oil Company offer an alternative, similar field for exploration if a foreign company failed to make a discovery in its initial site.

"The text was revised after regulators sought to make clear domestic reserves belonged to the state," Zanganeh said.

Changes also were made to reflect demands that major decisions by the managerial committee of any joint venture be approved by the national oil company.

At a Tehran conference in November, officials identified the oilfields Iran intended to offer to foreign operators under the terms of the new agreements while announcing their general terms.

The final contracts have been delayed since the first announcement in February 2014, as Iran sought feedback from potential foreign partners and government regulators. They were originally scheduled to be introduced at a London conference that was postponed indefinitely last month after several delays.