Oil Giants Better Placed to Win NIOC Contracts

A senior official on Sunday outlined some of the terms and conditions of the new oil and gas tenders that make it difficult for small and mid-tier companies to enter the multibillion dollar energy market.

The National Iranian Oil Company last week started the vetting process for foreign companies that want to bid for a raft of petroleum projects. But according to Ali Kardor, the chief executive of NIOC, companies with extensive background and expertise in the oil and gas sector will be better placed to win contracts, Mehr News Agency reported.

"Level of oil and gas production, experience in global oil and gas projects, access to modern technology and enhancing the rate of recovery (from oil/gas fields) are the most important criteria in the appraisal of foreign companies," Kardor said.

Iran hopes to raise $200 billion in foreign investment to finance its diverse energy projects, including $130 billion in the upstream exploration and production sector.

Kardor added that NIOC's exacting regulations and requirements mean that lesser-known companies would not be considered.

According to the NIOC, oil firms may submit their documents by Nov. 19. The state oil company will issue the final list of eligible companies on Dec. 7.

"Potential bidders should be currently active in at least one hydrocarbon project," Kardor said, stressing that the NIOC will also factor in their level of oil and gas output from the existing projects and companies with higher production will be favored.

"Production is an important prerequisite to start cooperation. Companies that are not (directly) involved in production and merely provide services, such as drilling intelligence, won't be part of the tenders," said the official.

However, the NIOC chief did not completely rule out collaboration with small and medium-size enterprises that seek a stake in Iran's energy projects alongside the multinationals.

"These companies can invest in smaller oil and gas development projects," he said without elaborating the basis on which the NIOC would categorize firms as small and medium and their eligibility.

------- Tenders

Tehran is proceeding with plans to tender some oil and gas fields in the present Iranian fiscal (ends March 2017), NIOC director for development and engineering said, adding that 10 preliminary agreements on oil and gas cooperation have been signed with foreign companies.

Gholamreza Manouchehri also said that the new projects, expected to be signed under Iran's upgraded model of contracts, will bring together domestic and foreign firms to develop the vast hydrocarbon industry.

Under the framework of Iran Petroleum Contract, domestic companies will be assigned as the main contractors of some small and medium-size fields with an option to partner with a foreign company.

"On the other hand, there are foreign companies that should pick an Iranian partner to develop large-scale development projects," Manouchehri said on the sidelines of an energy conference in Tehran on Sunday.

NIOC this month signed the first IPC deal at home with Persia Oil and Gas Industry Development Co., a subsidiary of Iranian holding Setad Ejraiye Farmane Emam, to develop three small and medium-size oilfields in the southern oil-rich Khuzestan Province.

The company is expected to sign the second of such deals with Khatam-al-Anbiya Construction Headquarters, an affiliate of the Islamic Revolution's Guard  Corps, in a few months.

IPC will replace the unattractive buyback model in major E&P projects, but buybacks would exist for smaller-scale oil and gas deals.

Manouchehri told reporters last week that Tehran is negotiating with 16 international energy companies to help operate and manage 50 oil and natural gas projects, with the giant South Azadegan Oilfield near the border with Iraq the first deal to be announced.