$40b Oil/Gas Projects to Be Offered in Feb.

$40b Oil/Gas Projects  to Be Offered in Feb.$40b Oil/Gas Projects  to Be Offered in Feb.

Up to 50 projects valued at $40 billion will be offered at the London seminar in which Iran's new petroleum contracts will be unveiled for the first time, a senior official at the National Iranian Oil Company (NIOC) said.

Some of the projects pertain to the development of the remaining phases of South Pars gas field, as well as other offshore and onshore gas fields. There are also projects for exploration and development of new fields, Moshtagh-Ali Gohari, deputy managing director for comparative planning at NIOC, was quoted by IRNA as saying.

The current buy-back framework is no longer attractive for foreign companies, and the government has established a new Iran Petroleum Contact (IPC) whereby the drawbacks of previous buy-back agreements have been revised, creating a new investment model as part of the drive to encourage western businesses.

IPC aims to attract foreign capital, services, know-how and technology, integrate the exploration, development, and production phases, and reduce investment risks by offering more flexibility in investment costs.

The introduction of the IPC marks a turning point in the way that the oil and gas industry can acquire the much needed know-how and technology to develop oil and gas fields.

IPC is scheduled to be discussed in London from Feb. 23-25.

Project Funding

To provide funds for oil and gas projects, the NIOC has recourse to 15 methods, with the most important being its own internal resources which covers 40 to 50 percent of the total funding.

The provision in note 2(G) of the budget enables the NIOC to invest up to $100 billion in oil and gas projects through private contractors.

"So far, $95 billion worth of projects are stipulated in line with the authorization given by note 2(G). Most of them were approved by the Economic Council [of the parliament]," the NIOC official said.

Banking facilities, buy-back agreements, and fixed rate bonds are among other financial instruments available to the NIOC.

Around 60 percent of the outlined investment plans for the upstream oil and gas industry during the past 10 years have been fulfilled. "The plan stipulated $200 billion investment, but only $120.7 billion was realized," the official noted.

For the coming year (begins March 2015), $22 billion investment is projected in the upstream sector, 50 percent of which is to be provided through note 2(G).