NIOC Reaches Out to Int'l Firms for Tenders
The National Iranian Oil Company has called on foreign corporations to submit documents to be vetted for a hitherto unknown number of oil and gas tenders.
According to a statement on the NIOC website, "pre-qualification documents and related information such as procedures, criteria and evaluation mechanisms" will be available online at www.nioc.ir as of Oct. 17. International exploration and production companies as well as integrated oil firms may submit their credentials by Nov. 19.
NIOC will issue the final list of eligible companies on Dec. 7, the statement said. It did not name the projects or when the tenders will be held. The South Azadegan Oilfield near the border with Iran will be the first project to be put out to tender, according to Ali Kardor, NIOC's chief executive 0fficer.
NIOC is the top government company that vets domestic and foreign corporations for taking part in the lucrative oil and gas projects. It has so far approved 11 Iranian firms for the new oil and gas projects. The deals with multinationals are expected to be signed under the terms of Iran Petroleum Contract—the country's new model of contracts to be used for major upstream projects.
According to reports, IPC will replace the unattractive buyback model in E&P projects, but buybacks would exist for smaller-scale oil and gas deals.
NIOC this month signed the first contract under the IPC framework with Persia Oil and Gas Industry Development Co., a subsidiary of Iranian holding Setad Ejraiye Farmane Emam. POGIDC will develop three small and medium-size oilfields in the southern oil-rich province of Khuzestan.
The Oil Ministry hopes that the tenders will ease the return of oil and gas majors to the country's emerging energy sector after the lifting of some international restrictions in January.
Nine months after the sanctions were lifted, some of the world's biggest traders have yet to strike major oil deals with the OPEC member, stymied by Tehran's tough stance on marketing its crude and US restrictions on dollar trade, Reuters reported.
Top executives from Vitol, Glencore, Trafigura and Gunvor told the Reuters Commodities Summit this week that while they are keen for a slice of the business, hurdles remain.
"It's still very difficult," Ian Taylor, chief executive of commodity trading house Vitol, said. He cited the lack of a usable dollar system to conduct transactions with the country, making transfers of the US currency troublesome and hindering trading.
Taylor said that while Vitol had started to do some business with Iran, the competition was strong. "Everybody is looking at it as well."
Most international sanctions against Iran were lifted in January, but remaining US restrictions stipulate that only non-US banks can do dollar trades with Iran provided these do not pass via financial institutions in the United States. Concerns were echoed by Gunvor Group managing director Torbjorn Tornqvist and Trafigura chief financial officer Christophe Salmon.
Limits on where crude can be sold remain a sticking point as it reduces a trader's ability to maximize profit margins, particularly in an oversupplied market.
"We shouldn't also forget that the Iranians ... when it comes to crude oil, are extremely skilful in their marketing. They need to know where it (crude) goes and to whom. And we see very little change: this is what we did before sanctions and this is what we'll continue to do after the sanctions," Tornqvist said.
"Iran is a very promising country for many companies including ourselves. But so far what we have done since the sanctions were lifted, it's really small," Salmon said.
There are also doubts over Iran's plans to swap oil from the Caspian Sea for crude loading in the Middle East.
"It's an incredibly difficult trade to make if you think about it and there aren't huge volumes available in the Caspian anyway," Taylor said. "I would be a little bit skeptical that the swap will start any day soon even though technically it can."