Iran's New Oil Contracts Will Help Cut Dole Queues

New contracts with international oil majors will help create thousands of jobs and plough billions of dollars into the key petroleum industry, according to Reza Khayyamian, head of the Society of Iranian Petroleum Industries Equipment Manufacturers.

"If foreign companies come to Iran's energy market and sign the (oil) deals, almost 100,000 jobs will be created," Khayyamian said on Monday in a press briefing for the 22nd International Oil, Gas, Refining and Petrochemical Exhibition that will be held May 6-9, ISNA reported.

"People are realistic. They know what it was like before and after the sanctions and know very well that creating jobs is difficult," the official said in response to the views of a presidential candidate who has claimed, rather strangely, that 600,000 jobs can be created in the petrochemical industry alone for every one million tons in added output. Tehran is expected to tender dozens of oil and gas field development projects this year using a new model of contracts, dubbed the Iran Petroleum Contract (IPC) that was first unveiled in late 2015. IPC has sweetened the terms for investment and cooperation and will replace a buyback model to develop major upstream projects.

However, opposition to the new contracts by the political opponents of President Hassan Rouhani and his administration has forestalled the launch of IPC deals.

Khayyamian pointed to plans to raise $200 billion in the petroleum sector in the sixth five-year national economic development plan that ends in 2022, and stressed that should the investment plans succeed it will reinvigorate the domestic equipment manufacturing industry.

"We also have a $300 billion market on our doorstep," the official said, referring to Iraq, which overtook Iran as the second-largest OPEC producer in 2012 by opening up its oil industry to global oil majors in the last few years.

  Recovering From Sanctions

Taking stock of the international economic sanctions that took a toll on the oil industry, Khayyamian acknowledged that domestic manufacturers of oil equipment have some real catching up to do with multinationals.

"Due to the past restrictions, we lack international licenses and standards in equipment production while exports to neighbors are limited. But joining hands with foreign companies will allow us to expand the sale of oil equipment under their names and licenses."

Some financial and trade curbs against Iran were removed in January 2016 in return for downscaling nuclear activities.

Iran was deprived of advanced technology and equipment to develop its oil and gas sector after the tightening of international restrictions in 2011 and 2012 that ostensibly targeted Tehran’s nuclear program but in fact undermined its oil exports, foreign trade and banking relations.

Essential items in oil and gas exploration/production, including various types of drill bits as well as wellhead and downhole equipment, are being produced by domestic manufacturers.

The government aims to expand the production of other equipment, such as control valves, pipes, rotating machines (turbines and compressors), smart pigs used in cleaning the pipes, oil and gas measurement tools as well as equipment associated with health and safety.