Foreign Firms Willing to Reenter Iran Oil Sector

Foreign Firms Willing  to Reenter Iran Oil Sector
Foreign Firms Willing  to Reenter Iran Oil Sector

European and American companies have expressed readiness to participate in the Iranian oil industry, the head of the Oil Contracts Revision Committee said Wednesday.

Low production costs and high prospects of the Iranian oil industry has turned it into an attractive market for foreign companies, provided that sanctions are lifted, Mehdi Hosseini was quoted by Mizan news agency as saying.

Following the recent redrafting of oil contracts, Iran’s contractual framework is now more attractive compared with that of neighbors, Hosseini said, specifying Azerbaijan, Kazakhstan and Persian Gulf Arab countries as being in competition with Iran.

“Iran is to offer more than 20 new projects encompassing exploration, green and brown oilfields,” Hosseini said. The draft Iran Petroleum Contract (IPC) is to be submitted to the cabinet next week.

Up to 50 projects worth $40 billion will be offered at the London seminar in which the IPC will be unveiled for the first time, deputy managing director for comparative planning at NIOC, Moshtagh-Ali Gohari said last week.

Development of the remaining phases of South Pars gas field, as well as other offshore and onshore gas fields are among the projects on offer. There are also projects for exploration and development of new fields.

The current buy-back framework is no longer attractive to foreign companies. A new IPC revising the drawbacks of previous buy-back agreements has therefore been devised by the government, creating a new investment model in a bid to encourage western businesses. IPC aims to attract foreign capital, services, know-how and technology, as well as integrate exploration, development, and production phases, and reduce investment risks by offering more flexibility in investment costs.

The introduction of IPC is 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.

The new model contract must be ratified by the government, but does not need be endorsed by the parliament. To be recognized as the official Iranian contract model, it has to be ratified prior to the London seminar. IPC is scheduled to be unveiled in London from Feb. 23-25.