OMV Says Waiting for Clarity in Oil Contracts

OMV Says Waiting for Clarity in Oil Contracts

Iran's oil contracts are not yet fit for Austrian energy group OMV to invest in planned projects in the country, which hopes foreign investment will revamp its ageing oil infrastructure, OMV's chief executive said.

“This is taking quite a long time ... We have not yet defined a clean framework for the projects that are interesting for us," Rainer Seele said in an interview with Reuters.

"We can make an investment decision only when we really know what the framework and the conditions are," he added.

In May, four months after most international sanctions against Iran were lifted after it sealed a landmark deal with six major powers (France, Britain, China, Russia, the US and Germany), OMV signed a memorandum of understanding with the National Iranian Oil Company for several projects there.

Seele said that talks to fine-tune a model contract for international oil companies have not been successful yet, but stressed that the process is still ongoing.

OMV's envisaged projects are in the Zagros area in western Iran, including the Cheshmeh Khosh and Band-E-Karkheh fields where OMV had started operations in 2001, and the Fars field in the south. Iran's Cabinet on Wednesday approved a draft for the country's new oil and gas contracts that includes 150 changes to a previous model contract.

Another hurdle for OMV to start injecting fresh money into Iran, which needs billions of dollars to overhaul its oil and gas infrastructure, is an outstanding debt Iran owes OMV to reimburse it for past appraisal and exploration activities.

Seele noted the debt is related to OMV's activities before international sanctions were imposed on Iran.

"We are in intensive talks [about this] that have not yet achieved their objective,” he said.

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