Iran to Start Vetting Int'l Oil, Gas Contractors

Iran to Start Vetting Int'l Oil, Gas Contractors Iran to Start Vetting Int'l Oil, Gas Contractors

Iran will start vetting foreign contractors for participation in its new oil and gas tenders within two weeks, Ali Kardor, head of the National Iranian Oil Company said Monday.

"The NIOC will qualify within the next two weeks competent international companies who meet the NIOC checklist," Kardor told a meeting of NIOC managers, Shana reported.

"Not all foreign firms will be able to participate in the tenders," he added.

Foreign firms seeking a pie of the lucrative energy projects should be classified as exploration and production (E&P) companies or international oil companies (IOCs), according to Kardor who said around 37 firms fit the two categories.

IOCs are privately-run and owned as opposed to national oil companies, known as NOCs.

Multinationals should also hold high corporate credit ratings from the three major international credit agencies, namely Standard & Poor's, Moody's, and Fitch Group, Kardor said without giving details.

Credit rating of a company indicates its competence in meeting its financial and contractual obligations. Credit agencies assign certain numbers or letters to show the credit quality. For instance, Fitch uses 'AAA' for 'reliable and stable' and 'D'—its lowest rating—to indicate a company 'has defaulted before'.

Iran is planning to attract more than $100 billion to renovate its aging oil infrastructure and raise production in a tight race for higher market share.

The country is finalizing the draft of its new model of contracts, known as Iran Petroleum Contracts (IPC), to attract foreign technology and investment in the key sector.

But Kardor said older contractual models, including the so-called buyback contracts which have been in place for over 20 years, will remain into force.

"IPC is not fundamentally different from buybacks, except in a longer payback period and more reasonable terms for risks and rewards," said the NIOC chief.

The first contracts under the IPC are expected to be signed in three months.

Unlike the short expiry of the buybacks, the IPC model will offer extended contract duration of 20-25 years, providing foreign companies with a greater level of certainty and incentive to invest.

------- Partnership With Iranians

The process of selecting foreign firms comes as the Oil Ministry has named eight major Iranian companies and conglomerates for partnership with multinationals in future oil and gas projects.

Tehran says foreign contractors should choose an Iranian partner to be able to operate in the post-sanctions energy market.

Kardor underscored the partnership as an effort to gradually transfer technology and knowhow. "The transfer of technology is not limited to transferring hardware. Iranian firms can learn time and cost management in the process."

In an interview in May Kardor said Iran seeks management of hydrocarbon reserves as well as transfer equipment and advanced technology as it opens up its energy sector to the outside world.

Also last month, Iran's Oil Minister Bijan Namdar Zanganeh said the new oil/gas contracts will pave the way for forming a major Iranian exploration and production company "108 years after the first oil extraction in Iran".