IRAPEC Extends Support to New Oil Contracts

IRAPEC Extends Support to New Oil Contracts IRAPEC Extends Support to New Oil Contracts

Iran’s Association of Petroleum Industry Engineering and Construction Companies (IRAPEC) has defended the general structure of the new oil and gas contractual framework, aka Iran Petroleum Contracts, in a letter it sent to the Parliament Research Center.  

“Preparing the new framework of oil contracts is a major step forward in the petroleum industry and a valuable move,” part of the letter reads, Shana reported.

Established in 1990, the association consists of 213 Iranian private oil and associated companies.

The letter, however, concurs that IPC has its share of shortcomings, but calls on all political stakeholders to discuss the new contracts primarily in light of national interest.

IPC is aimed at bringing back foreign companies to Iran’s key oil and gas sectors, following years of limited cooperation with multinationals and inadequate investment in the sector. But the new contracts have faced strong criticism from the political opponents of the Rouhani administration and their media outlets.

The first round of tenders under the IPC was slated for February, but controversy over some of the terms put it on hold. Some opponents claim IPC will allow foreigners cheap access to Iran’s massive hydrocarbon resources under long-term contracts.

Advocates argue that Iran needs to make up for years of underinvestment in the energy sector by sweetening the terms of oil and gas contracts.

“We believe that to avoid more financial loss, the Oil Ministry should finalize and launch the IPC as soon as possible, especially for the joint oil and gas fields that are being exploited at high speed by neighboring countries,” the letter said.  

IRAPEC has also underscored that in view of years of crippling international sanctions, the oil industry’s private sector has visibly stagnated. It says that the oil industry, as the engine of economic growth, needs a breath of fresh air via  foreign investments.

  Delays and Losses

According to Mohsen Qamsari, National Iranian Oil Company’s director for international affairs, Tehran is running out of time to introduce the IPC to the oil majors due to what is seen as a costly political dispute with little or no connection to economic viability.

“Two years of delay in introducing the IPC has impeded production from the joint fields while neighboring countries are making the most out of shared reserves,” he said last month.

Despite grappling with the 2003 US intervention, civil strife and the war against the medieval Islamic State terrorist group that has seized swathes of territory since 2014, Iraq has boosted crude production to 4.6 million barrels per day.

Iran is currently pumping 3.6 million bpd, a level last seen before tighter international restrictions were imposed in 2011 and 2012. Output fell to around 2.5 million barrels when the sanctions were in place.

Iran is negotiating with several foreign companies to implement enhanced oil recovery techniques in its aging fields.