Oil Firms Have Latitude in Picking IPC Partners

Oil Firms Have Latitude in Picking IPC Partners
Oil Firms Have Latitude in Picking IPC Partners

International oil firms are carefully studying a list of top Iranian companies for partnership in the country's new oil and gas projects, the deputy oil minister for international affairs said Thursday.

"Foreign firms will receive Iranian companies well," Amirhossein Zamaninia said, referring to eight companies and conglomerates approved by the government to work as Iranian partners of multinationals in future energy projects, Shana reported.

Iran has been working on a new framework for its oil and gas contracts to attract foreign technology and investment in the key sector. Under the new contractual terms, dubbed the Iran Petroleum Contracts, multinationals must have an Iranian partner to be able to qualify for projects.

However, Zamaninia said that foreign firms will not be confined to choose from the government-approved shortlist of Iranian firms.

"The list is not mandatory and they are not compelled to pick and choose only from the list," the official said. He did not specify the alternative partnership mechanism.

After a long vetting process, the Oil Ministry this month gave the green light to eight major Iranian companies and conglomerates, namely Petropars, Oil Industries Engineering and Construction (OIEC), Dana Energy Company, Petroiran, MAPNA Group, Khatam-al Anbia, the Industrial Development & Renovation Organization of Iran (IDRO) and the Setad Ejraiye Farmane Emam.

The list is not final as the ministry has given nine other companies a second chance to qualify.

Details of the confidential and long-awaited oil and gas contracts that Tehran is offering to the energy giants are slowly being revealed. Earlier this week, the Resistance Economy Headquarters—a top government economic advisory body—approved the IPC the after some amendments. It is now awaiting the government's stamp of approval.

  Lost Market Share

Iran, the third-largest producer of the Organization of Petroleum Exporting Countries, is expected to sign the first new oil contracts in three months.

The country is on a quest to claw back the market share it lost to rival producers when the international sanctions were tightened in 2012 over the long dispute over Tehran's nuclear energy program.

Ali Kardor, head of the state-owned National Iranian Oil Company, said this week that Iran will reach its pre-sanctions crude output level of 4 million barrels per day by September. The economic restrictions severely undermined oil production to around 2.5 million bpd while exports sank to a little over a million barrels. Iran lined up some 50 oil and gas development projects in an international conference last year. Some of the projects were expected to be put out to tender in February, but opposition to the terms in the new contracts by some powerful economic lobbies and the political opponents of the Tehran government has so far postponed the bidding process.

It is also believed that the systemic plunge in global crude prices over the past two years and the supply glut also played a part in delaying the contracts as both Iran and the oil giants wait for sweetened deals and more attractive terms.