Iran Seeking New Oil Contracts

He said that he was hopeful that the new model would bring in some $25 billion in investment in Iran’s energy sector over the next years. Buy-backs also paid no compensation to companies that spent more than budgeted amounts to develop a field. He told executives from European and Asian oil majors that the new contract model should be attractive. “Total is interested, Eni is interested”.

Referring to the newly unveiled IPC (Iran petroleum contract) model, he said that although foreign investment is one gain to be achieved by the contracts, the foreign companies will have to choose Iranian partners, IRIB Channel 3 reported November 28. “All banking and economic sanctions will be lifted by the first week of January”, Amir Hossein Zamaninia, deputy oil minister for worldwide and commerce affairs, said.

According to the existing contract between Tehran and Ankara, Iran is committed to deliver up to 10 billion cubic meters (bcm) of gas per year. Representatives of Lukoil and Shell declined to comment at the conference.

Zanganeh said last week that Iran will export an additional 500,000 barrels of oil a day after sanctions are lifted – likely in early 2016 – to reclaim its market share despite low prices.

There have been fierce debates at previous meetings of the Organization of the Petroleum Exporting Countries (OPEC) when countries have suggested reintroducing the quotas, Zanganeh said.

He went on to say that Iran provides a good opportunity for foreign investors thanks to its abundant capacities in the fields of oil and gas industry. In the mid-1970s, its oil output was as high as 6 million barrels per day.

“Like any other human creation it may need amendment and development”, he said of the new contract.

The Iranian partner in a joint venture must have a majority stake of at least 51 per cent.

Foreign companies, however, can not dash out of their contractual obligations if sanctions are ever re-imposed on Iran. If the United Nations restores sanctions, a company could claim force majeure if unable to execute a contract, he said.

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. The work covers 52 production and 18 exploration projects, both onshore and in the Gulf and Caspian Sea. He said Iran’s crude oil production would reach 4.7 million barrels per day (bpd) by end of the five-year development plan, set to begin next March 21.