Iran unveils new model of oil contracts to attract investments

During a press conference, Iranian Oil Minister Bijan Namdar Zanganeh said that the newly developed model of oil contracts, dubbed as Iran Petroleum Contract (IPC), was created to help the country attract investment from Asian and European investors.

Total SA (NYSE:TOT), Royal Dutch Shell Plc (NYSE:RDS-A) and Lukoil PJSC (OTCMKT:LUKOF) are among global companies that have selected Crude Oil and Nat Gas deposits to develop in Iran as the holder of the world’s 4th-largest Crude reserves presents $30-B worth of projects to investors.

Iran’s oil and gas plans are prepared in such a way that they are suitable not only for big global companies, but also for medium-sized and average ones, he added.

Experts believe that Iran’s economic growth would rise remarkably after the final nuclear deal takes effect.

Therefore, the contracts are in no way related to or influenced by oil prices, he noted. Iran is hoping to boost oil production to 5.7 million barrels a day by 2021.

“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”.

Under the new contracts, the only thing that foreign companies will do is to manage and engineer and procure financial sources, he said. “The next step is for foreign vendors to make a technical assessment and choose a domestic partner”. Iran won’t allow foreign companies to escape their contractual obligations if the US or another party re-imposes unilateral sanctions, said Seyed Mostafa Zeynoddin, an adviser to the committee. NIOC will announce other terms when it starts the tendering process in four to five months, she said. If the United Nations restores sanctions, a company could claim force majeure if unable to execute a contract, he said. The projects include a combination of brown and green fields as well as exploration blocks up for development.

“Zanganeh today unveiled contracts that effectively transfers the rights of exploration, extraction, exploitation and sale Iran’s oil to foreign companies for 25 years”, the conservative news website, rejanews.com, said. The Organization of the Petroleum Exporting Countries (OPEC) member is likely to increase crude oil exports by one million barrels per day (bpd) in March 2016, once the sanctions on its trade are lifted.

“If the production of oil or gas is stopped for any reason, such as sanctions or any extraordinary condition, paying the contractor is halted completely until things get back to their normal situations”.