Oil Minister Bijan Namdar Zanganeh has urged the need to support the private sector in line with the country's push toward indigenization of oil and gas equipment, saying his ministry has devised plans to oil the wheels of the sector by giving incentives to local companies.
In a recent TV interview, Zanganeh said over $6 billion worth of oil contracts will be assigned to local upstream and downstream companies in the current fiscal, which started on March 21, to manufacture much-needed equipment in oil and gas sectors, Mehr News Agency reported on Tuesday.
The minister added that the government has called for allocating major projects to local EPC (engineering, procurement, and construction) and EPD (engineering, procurement and drilling) contractors.
Describing Iran Petroleum Contract, the country's new model of oil and gas contracts, as a cornerstone for fostering domestic players' potentials, Zanganeh said the new framework obliges local firms to join foreign partners in petroleum projects.
"The ministry has produced a list of locally-produced items … Domestic contractors will be required to use such products in their oil and gas activities," he said.
Earlier reports from March quoted Zanganeh as saying that "nearly two-thirds of demand for oil and gas equipment are met by domestic manufacturers" and "if we proceed according to plans, up to 85% of equipment used in the petroleum sector can be produced by domestic companies".
The ministry has taken measures to boost the domestic manufacture of oil equipment to stem the outflow of capital. In 2014, a committee was set up to pursue the production of 10 major categories of equipment for the key oil and gas sector, including turbines and compressors.
Iran also wants to expand the production of other pieces of 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.
Zanganeh had said then that the government does not insist on indigenizing every piece of equipment.
"The production of some oil equipment is not viable. It is not for lack of know-how, but simply because it does not make economic sense," he said.
Reportedly, devices used 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.
Iran was deprived of much-needed 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 significantly undermined its oil exports, foreign trade and banking relations.
