Chairman of Iran’s oil contracts restricting committee Mehdi Hosseini said that Iran has selected 45 oil and gas projects to show international companies at a conference that will be in London in December 14-16. Hosseini said that Iran would present the projects alongside the finished versions of its new oil contracts, reports Bloomberg.
“We will define projects in the oil and gas sector as much as feasible and necessary since we believe this sector will bring wealth and economic development,” Hosseini said. “As far as this conference is concerned, we have defined around 45 projects which include exploratory blocs at varying development costs.”
Iran may give companies two to three months to decide whether to bid on the projects, he added. “The exact length will be decided by the time of the conference.” Following the conference, Iran will begin asking companies to bid.
New contract model hopes to attract more investment
During his interview in Tehran, Hosseini said that Iran hopes to increase its crude production to 5.7 MMBOPD, which is 0.7 MMBOPD higher than the country’s oil minister Bijan Zanganeh said the country hopes to reach. Even to make it to the 5.0 MMBOPD mark, the country will need $280 billion of foreign investment to revitalize its oil and gas sector.
One of the ways Iran hopes to attract international oil companies (IOCs) is through its new Iranian Petroleum Contracts (IPCs). Iran’s laws do not allow for foreign ownership of natural resources, making more traditional production-sharing contracts impossible. “They cannot change the law, but what they have done with the new IPCs is to take a service contract and make it function like a production sharing contract,” Dr. Iman Nasseri of FGE, an international energy consulting group, told Oil & Gas 360® during an exclusive interview.
The final version of the new IPC will not be made available until the London conference, but Nasseri said the draft versions he has seen so far are promising.
“The developers of upstream resources will be paid a service fee per barrel of oil produced, but they have made that fee variable,” he explains. “The fee will change based on the amount of production, whether the project is offshore or onshore, and other factors will also contribute to determining how much the IOC will receive for its services.” By tying the contract to services provided by the IOC, rather than production coming out of the ground, the IPCs hope to attract investors without violating Iranian law.
“We consulted with almost all medium and major oil companies over our contractual contents and projects,” Hosseini said. “And the feedbacks have been positive.”
“The hope with the new IPCs was to make Iran more attractive than Iraq, Brazil or the United Arab Emirates,” said Nasseri.
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