Iran is seeking US$25 billion in investments from 50 deals involving international oil and gas companies, foreign executives were told on Saturday in Tehran as the government outlined new contractual terms.
Iranian Oil Minister Bijan Zanganeh opened a two-day conference in the capital attended by BP PLC, Royal Dutch Shell PLC, Total SA of France, ENI SpA of Italy, Repsol SA of Spain, OMV AG from Austria and other majors.
All are weighing a return if, as expected, sanctions related to Iran’s nuclear program are lifted early next year in line with a July 14 deal between Tehran and six world powers led by the US.
Photo: EPA
The new Iran Petroleum Contract (IPC) is to replace “buy-back” agreements, in which foreign companies were paid a set price for all oil and gas they helped Iran exploit. Iran at that point took over production.
The IPC would instead launch joint ventures for crude oil and gas production with international companies being paid a share of the total output, officials said.
The Iranian partner in a joint venture must have a majority stake of at least 51 percent.
Zanganeh said consultations with international companies led to the new contracts, which would initially be for four years at the exploration phase, extendible for a further two years.
Iran is to have between five and seven years to pay back initial sums invested by the foreign companies once production starts, but cooperation and development in commercially viable fields could go on as long as 25 years, officials said.
“The contract models introduced today are not perfect or ideal, but an effective and responsive model for both sides,” Zanganeh said, saying that US$25 billion of foreign investment would constitute “success.”
“Like any other human creation it might need amendment and development,” he said of the new contract.
Iran has the world’s fourth-largest oil and second-largest proven gas reserves and its energy industry has been underdeveloped since the Islamic revolution in 1979.
Asked why no US companies were at Saturday’s event, Zanganeh said there was no bar on them considering Iran’s energy market but US firms were put off because sanctions are still in place.
“The atmosphere ... is ready for the presence of these companies in development of Iran’s oil industry, but they themselves have problems for being present in Iran,” he said.
Iran is scheduled in February to hold a conference in London regarding investment and the new contracts which, if sanctions have by then been lifted, could attract US energy giants.
An oil embargo imposed in 2012 by the US and the EU as punishment for Iran’s disputed nuclear program — it denies ever seeking to develop a bomb — severely damaged Tehran’s energy industry and sales income.
Stephane Michel, president of exploration and production for Total in the Middle East and North Africa, described the contract and project offers as an “important milestone” for Iran, but said further analysis was needed before any deal.
“We need to look at what was presented to better understand how it’s going to work and to make up our mind,” he said. “But it’s good to be able to do that now, based on facts.
“It’s complex and we need to study first the length of the contracts and second who the partners would be, both in development and operations.” Iran produces about 2.8 million barrels of oil per day (bpd), compared with 4 million bpd in 2011, following US and other Western pressure on buyers to steer clear of the country.
However, the nuclear deal has paved the way for new tie-ups and 152 international companies were at Saturday’s event, organizers said, along with 183 Iranian firms.
Despite low crude prices Iran is intent on reclaiming lost market share and has pledged to increase output by 500,000 bpd once sanctions are lifted, independent of OPEC guidance.
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