3 More Iranian Contractors Approved for IPC

The government has expanded the list of domestic companies for work in  dozens of oil and gas projects as it gears up for its first international tender under a new model of oil and gas contracts this month.

Mohammadreza Moqaddam, deputy oil minister for engineering, research and technology, said the ministry has approved Ghadir Investment Company, Pasargad Development Company and Petro Gohar Farasahel Kish Co. as contractors for upstream oil and gas projects under the long-awaited Iran Petroleum Contract, Shana reported on Wednesday.

The first two are subsidiaries of Saderat Bank of Iran and Bank Pasargad respectively.

They join a shortlist of eight companies and conglomerates that already have the blessing  of the government for participation in the new projects, namely, Petropars, Oil Industries Engineering and Construction (OIEC), Setad Ejraiye Farmane Emam, Dana Energy Company, Petroiran, MAPNA Group, Khatam-al Anbia and the Industrial Development and Renovation Organization of Iran (IDRO).

According to the terms of IPC, foreign companies should have an Iranian partner in exploration and production projects and transfer their knowhow as Iran aims to establish large E&P companies with technical and operational competence.

Domestic companies are only permitted to carry out exploration and production activities, as the current regulations bar them from producing equipment under engineering, procurement and construction contracts, according to Moqaddam.

Tehran is offering multinationals more attractive terms for cooperation and investment in its key oil and gas sector, including higher fee on every barrel of oil produced from riskier projects and extended 20-25 year contracts.

However, IPC will coexist with the lackluster buyback model which has been used in most oil and gas projects over the past two decades.

  1st IPC Agreement Signed

In a surprise move on Tuesday, state-run National Iranian Oil Company signed the first agreement under the IPC framework with a domestic corporation.

According to the non-binding $2.2 billion deal, Persia Oil and Gas Industry Development Co. will develop three oilfields in the southern oil-rich province of Khuzestan via the enhanced oil recovery (EOR) methods.

According to an NIOC statement, POGIDC can choose a foreign partner "if necessary".

Iran is recovering from international restrictions that undermined its economy and cut its crude oil output by 1.5 million barrels per day over the past few years.

Iran was once the second-largest producer of the Organization of Petroleum Exporting Countries, but slipped to 6th place under the spell of sanctions.

It has boosted the production of crude oil and condensates to 3.8 million barrels per day after the international sanctions were eased in mid-January.

Oil Ministry officials say that production will reach the pre-sanctions level of 4 million bpd "over the next few months".