Competence Key to Vetting Local Oil, Gas Contractors

Iran's state oil company is lining up a spate of subcontracts for local firms as part of large-scale oil and gas development projects and aims to ensure that incompetent firms will be struck out from the list of contenders, according to an official at the National Iranian Oil Company.

The lifting of economic sanctions last year allowed Iran to open its energy market to foreign companies. And in the first breakthrough in its energy sector, Tehran announced a $5 billion deal with Total S.A. to develop an offshore gas project.

As per the agreement, Total is required to use Iranian firms for at least 50% of operational works at the South Pars Phase 11 project and the NIOC says it has its own screening process to certify eligible companies for oil and gas tenders, including the South Pars venture.

"If a producer does not meet the minimum technical standards, it will be left out of the tender even if it submits the lowest bid," said Ebrahim Taleqani, who oversees NIOC's Research and Technology Department, ISNA reported.

He said the provision of oil and gas equipment will not be enough, as contractors "should have the know-how to produce".

"NIOC will use a consultant at every step of [the implementation of] projects to assess whether the contractors have the competence to produce a piece of equipment," he said.

The Oil Ministry has prioritized the development of key equipment by local manufacturers to boost domestic economy and curb the outflow of millions of dollars that should be invested at home.

Taleqani said NIOC has produced a list of strategic items that are in high demand to be indigenized by local knowledge-based companies.

"We need to move toward acquisition of technologies in the oil industry," he said.

According to the Society of Iranian Petroleum Industry Equipment Manufacturers, the first offshore jacket platform for SP Phase 11 was manufactured by Iranian experts.

According to reports, representatives of Total have met with local manufacturers and contractors in Tehran and elaborated on its standards and evaluation process. Domestic firms look to secure a place in the gas project under Total's leadership as engineering, procurement and construction companies, general contractors or oil services firms.

  More Oil, Gas Deals

Despite uncertainties over Washington's decision on reimposing sanctions against Tehran, the Oil Ministry hopes Total's investment would ease the return of other European heavyweights.

The country has estimated investment requirements in its petroleum projects at $200 billion, including some $130 billion for exploration and production.

NIOC says it is on pace to conclude 10 more oil and gas deals by March 2018, the end of the current fiscal year.

The onshore Azadegan, Sohrab, Azar, Abteymour and Mansouri oilfields in southern and southwestern Iran, as well as the oil layer of the giant South Pars Gas Field in the Persian Gulf, have been listed as the ministry's top-priority projects.