IPC Deals Will Spur Domestic Oil Equipment Sector

New oil and gas contracts with international energy majors is a unique opportunity for domestic manufacturers of oil and gas equipment to enhance their managerial and financial capacities and establish joint ventures to expand their business overseas, the head of the Society of Iranian Petroleum Industries Equipment Manufacturers said.

"Should foreign companies come to Iran's energy market, scores of new jobs will be created, which will not only contribute to the rise in employment rate but also plow millions of dollars into the key petroleum industry," Reza Khayyamian also said on Monday, IRNA reported.

Pointing to the new Iran Petroleum Contract model that has been designed to attract foreign investment in oil and gas projects, Khayyamian said, "Based on the terms of IPC, Tehran will sweeten its contracts for foreign companies if they incorporate more Iranian firms in their development projects."

According to one of the requirements of the new contracts, whatever equipment that can be manufactured domestically should not be imported by foreign contractors, "otherwise, that would be a violation of IPC and they (foreign companies) will be fined."

According to the official, IPC is the first Iranian oil contract that clearly stipulates a role for domestic oil and gas equipment manufacturers.

"As long as Iranian oil and gas equipment producers do not interact with foreign firms, they will not be able to play a key role in the global energy market," he said, adding that teaming up with big names like BP, Eni, OMW and Total can help Iranian manufacturers expand their foothold in the increasingly saturated market.   

Highlighting the importance of competition, Khayyamian said, "When our producers do not have the chance to compete with household brand names, the quality of our services cannot comply with international standards."

Pointing to the benefits of a long-term deal with topnotch energy majors, Khayyamian said, "The elimination of middlemen is one of the significant achievements of joining hands with internationals as they would use domestic producers to meet their demand and marginalize intermediaries."

Khayyamian pointed to plans to raise $200 billion in the petroleum sector in the sixth five-year national economic development plan that ends in 2022 and said domestic oil equipment manufacturing industry will significantly benefit from prospective oil and gas contracts with foreign firms.

IPC obliges foreign contractors to work alongside Iranian firms, a measure aimed at helping domestic firms gradually prepare for international oil and gas contracts.

The National Iranian Oil Company has approved 11 domestic corporations for partnership with internationals in future oil and gas projects. The list includes names such as energy and engineering company MAPNA Group as well as the Industrial Development and Renovation Organization of Iran.