National Iranian Oil Company Says Finalizing Deal With OMV

The National Iranian Oil Company is in the final phase of talks with OMV to sign a contract to sell 40,000 barrels of oil per day to the Austrian oil and gas company, the NIOC chief said.

"The prospective agreement will help Tehran pay its outstanding debt to OMV," Ali Kardor was quoted as saying by IRNA on Sunday.

Commenting on NIOC arrears to OMV, the official added, "The Austrian giant had discovered an oil field in Iran but had not been paid for the exploration."

According to Kardor, OMV will be entitled to 7.25% of total value of exports for an unknown period until the dues are settled.

The senior oil official echoed calls by higher-ups in the government, calling for normal economic and trade ties to the outside world on the basis of mutual interest.

"Development cannot and will not succeed in isolation," Kardor said, noting that an effective strategy to promote economic growth in developing states like Iran is through close collaboration with international companies, attracting foreign investment as well as technology transfer.

Kardor added that as per the budget law of the current fiscal (March 2017-18), the Oil Ministry is willing to issue bonds worth $3 billion to raise investment in joint oilfields. He did not provide details.

Effects of Nuclear Deal

Kardor asserted that the sanctions removal in January 2016 revived the incapacitated oil sector as Tehran aims to invest billions of dollars in upstream and downstream projects by attracting foreign investment.     

"Had it not been for the nuclear agreement (with the six world powers], our oil exports would have plunged to 450,000 barrels per day instead of 2.5 million bpd. Moreover, we would have been forced to sell oil for food and medicine."

Under the sanctions regime, Iran's oil production fell to 2.5 million barrels per day from nearly 4 million bpd and exports to 1 million barrels daily.

Highlighting the current exports level at 2.5 million bpd, he noted that "exports reached a record high of 3.047 million barrels a day in December."

Rejecting speculations on offering high discounts to foreign dealers selling Iran's oil, Kardor said the state-owned oil company is not underselling crude simply because oil prices are function of the international market.

Asked about preliminary assessments of multinationals' proposals to develop oilfields, he said, " Russia's Lukoil and Zarubezhneft, Indonesia's Pertamina, Japan's Inpex, French energy giant Total S.A. and Denmark's Maersk Group, the state-owned China National Petroleum Corporation (CNPC) and Austria's OMV are among the majors that have provided NIOC with the results of their studies."

Oilfield study agreements entail surveys in six months, after which the companies should present development proposals.

Iran is pushing for new deals with multinationals to raise crude production despite a global oversupply and persistently low prices. It is now pumping close to 4 million barrels a day, a level last seen before the tightening of international sanctions in 2011.