An oil refinery is seen in Tehran. Iran’s oil ministry yesterday said the country’s new model for oil field development contract aims to tempt back foreign energy firms with 25-year deals.
Reuters/Dubai
Iran’s new model for oil field development contracts aims to tempt back foreign energy companies with 25-year deals, Iran’s oil ministry news service said yesterday.
One change under the new integrated petroleum contract (IPC) will allow foreign contractors to work on fields over the long term instead of having to hand them over at an early stage to Iranian companies.
Under Iran’s former “buy back” system, contractors did initial development work but then had to leave the country and await payment in oil, which proved unpopular with foreign investors before Western sanctions drove them away.
Mehdi Hosseini, head of a committee revising that system, told a forum in Tehran on Sunday that approach was too one-sided and only benefited Iran.
Investors will also be offered better terms for riskier projects, as in neighbouring Iraq, whose contracts Iranian officials drew from.
“In the new contracts, different stages of the petroleum industry (exploration, development and production) are awarded in an integrated manner,” Hosseini was quoted as saying by the Shana oil ministry news service.
“We must try to persuade foreign companies to enter high-risk zones of the petroleum industry,” he said, adding that the government should not shoulder the high costs of exploring for oil and gas but should ensure contracts reward those who do.
Unlike the last generation of contracts, which required contractors to leave Iran within five years of developing new fields, foreign contractors will be allowed to work on them for 20-25 years, Shana reported an committee adviser as saying on Monday.
Some oil majors are waiting for multi-million dollar payments for projects completed decades ago.
