Iran Envisages Bigger Domestic Role in IPC Projects

The National Iranian Oil Company is compiling a list of domestic companies that can operate as part of future oil and gas development projects, Ali Kardor, the NIOC chief, said at the weekend.

"Once an international tender is held for an oil/gas project, several subprojects will be introduced as part of the master development plan. We are willing to create the conditions for domestic companies to play a  role in the subprojects," Kardor was quoted as saying by Shana, the Oil Ministry's official news agency.

The contractor of a big engineering and construction project may divide the project into subprojects or 'packages', covering different sections of the project. 

According to Kardor, the so-called packages will be subject to engineering, procurement and construction (EPC) contracts.

Kardor said as part of efforts to spur competition, domestic firms will not be allowed to operate in both the exploration and production (E&P) sector and EPC projects.

Iran has lined up dozens of oil and gas fields for tender to multinationals under a new model of contracts, dubbed the Iran Petroleum Contract (IPC). 

The new model obliges foreign contractors to choose and work alongside Iranian firms, a measure aimed to help domestic firms gradually prepare for international oil and gas contracts.

NIOC has approved 11 domestic corporations for partnership with internationals in future oil and gas projects. The list includes notable names such as energy and engineering company MAPNA Group, Khatam-al-Anbia Construction Headquarters and the Industrial Development and Renovation Organization of Iran (IDRO).

Eligibility List 

Kardor did not specify whether or not the 11 companies will be allowed  to undertake EPC contracts.

NIOC released a list of 29 international companies last month that it said are eligible to bid for the oil and gas projects. A second list of foreign contractors for IPC projects will be published soon. 

The list is expected to include Russian majors such as Zarubezhneft and Tatneft, among others who were left out from the first list.

"Twenty-nine companies have been qualified, but we want to add more companies to the list," the NIOC chief said.

Kardor said Saturday that the NIOC will announce new contracts to develop oil and natural gas in mid-February in the first such tender since the lifting of international sanctions a year ago.

The plan was to hold the first tender at the end of January, but it will be held with a two-week delay. 

Officials have underlined the coveted South Azadegan Oilfield near the Iraqi border as the first project to be tendered.

President Hassan Rouhani's administration has developed IPC as an attractive replacement for the lackluster buyback model that was used predominantly in energy contracts over the last two decades.

Outlines of the new contracts were first unveiled in late 2015, but it faced some headwinds, most notably protestations from the political opponents of the government who  claim the contracts will allow "foreign powers to plunder the country's hydrocarbon wealth."