New Iran Oil Contract Does Not Need Majlis Approval

New Iran Oil Contract Does Not Need Majlis ApprovalNew Iran Oil Contract Does Not Need Majlis Approval

A member of parliament on Tuesday said the new model of Iran’s oil contracts does not need the approval of Majlis, bringing the framework a step closer to being finalized.

“We oversee and assess the Iran Petroleum Contract in the Supervision Committee and it does not need to be put to the vote in parliament,” Abdolhamid Khedri was quoted by Oil Ministry’s official news agency Shana as saying.

The lawmaker was referring to a special committee formed in Majlis Energy Commission to oversee the revisions made to IPC over the past few months.

The outlines of IPC were approved in a Cabinet meeting last week shortly after it got the backing of Resistance Economy Headquarters—a top government economic advisory body—after some amendments.

But there has been uncertainty on whether or not IPC had to be adopted by the Parliament.

In a statement this month, Oil Minister Bijan Namdar Zanganeh said the “process will begin to set the contracts in motion” after IPC was endorsed by the government.

The government ratified the draft of IPC’s “general conditions, structure and patterns of the upstream petroleum and gas contracts which included more than 150 minor and major changes,” according to Shana.

Sepidar Karimi, a lawyer and an energy expert based in Tehran, told Financial Tribune that Majlis will maintain a supervisory role at the present stage unless it finds nonconformities in the terms of the contract.

“According to Article 138 of Iran’s Constitution, Iran’s Cabinet has the right to lay down laws and regulations. However, government laws under this article should be brought to the notice of the parliament,” Karimi said in an emailed statement.

“In case the parliament finds the law contrary to the body of law, it will send the law back to the Cabinet for modification; otherwise Majlis will be authorized to nullify the law,” she added.

 Different Models

Officials say some of the drawbacks of previous oil contracts, such as the terms of the so-called buyback contracts that have been around for more than 20 years, have been revised.

The two models are now set to coexist. IPC is expected to be used as the framework for contracts to develop Iran’s shared oil and gas fields, while “some fields will be put out to tender under a buyback model as well as engineering, procurement, construction and financing contracts in the near future”, Ali Kardor, the head of state-run National Iranian Oil Company, said last month.

Iran lined up some 50 oil and gas development projects in an international conference last year. Some of the projects were expected to be tendered in February, but opposition to the terms in the new contract by some powerful economic lobbies and the political opponents of the Tehran government has so far postponed the bidding process.

Following the removal of most financial and trade restrictions over Iran’s nuclear dispute six months ago, Tehran is taking steps to open up its energy sector as it hopes to uplift its sanctions-hit oil and gas sector through foreign investment and technology.