In Oil & Companies News 12/05/2015
A new model of oil contracts Iran is drawing up to further attract foreign companies should prioritize hydrocarbon fields it shares with neighboring countries, a senior Iranian official said.
“In the IPC (Iran Petroleum Contract) contracts, joint fields should be given the priority. We have to make [the contracts] attractive enough for oil companies to be more willing for investment,” Mehdi Hosseini said.
Hosseini heads a committee named by Minister of Petroleum Bijan Zangeneh to sweeten oil contracts.
He said that big oil companies have said they are no long interested in Iran’s buyback deals.
IPC is replacing buyback deals. Under a buyback deal, the host government agrees to pay the contractor an agreed price for all volumes of hydrocarbons the contractor produces.
But under the IPC, National Iranian Oil Company (NIOC) will set up joint ventures for crude oil and gas production with international companies which will be paid with a share of the output.
“We are in a competitive world of finance, capital and services. Therefore, we have to design a contract model to be able to compete without losing the game,” Hosseini said.
He said Iran’s energy-thirsty neighbors like Turkey and Pakistan are willing to receive gas from Iran which sits atop the world’s second largest gas reserves.
“It is important to work out mechanisms to encourage big oil companies to be present in Iran’s oil projects,” said Hosseini.
Iran also sits on the world’s fourth largest oil reserves. The country is willing to develop dozens of oil and gas fields it shares with neighbors.
Iran and Qatar are jointly operating the massive offshore South Pars gas field while rich hydrocarbon reservoirs in West Karoun region in southwestern Iran are shared with Iraq.
Iran hopes to be able to introduce IPC to world oil companies in September after a nuclear deal is expected to have been reached by then with world powers to result in the lifting of sanctions on the Islamic Republic.
