A general view of Iran’s South Pars gas field infrastructure (file). Iran’s new oil contracts will allow international companies to invest for 20 years with the option of extending for an additional five.
Iran is preparing by the end of March to start soliciting bids from international companies for rights to develop oil fields as the country anticipates the removal of economic sanctions that have hobbled its crude production and exports.
The Gulf nation, once Opec’s second-largest producer, wants to begin organising bids by the next Iranian calendar year starting March 21, Seyed Mehdi Hosseini, chairman of the Oil Ministry’s Oil Contract Restructuring Committee, said recently in an interview in Tehran. It’s seeking to sign oilfield-development contracts within two years at the latest, he said.
Iran’s new oil contracts will allow international companies to invest for 20 years with the option of extending for an additional five, he said. Companies will share in the benefit of an increase in oil prices but must also help bear the risk of a decrease, Hosseini said.
Iran, with the world’s fourth-largest reserves of oil, is gearing up to boost output once world powers lift the sanctions they imposed to deter the nation’s nuclear programme. Oil exports fell to an average 1.4mn bpd last year from 2.6mn in 2011, US Energy Information Administration data show.
Iran currently ranks fifth in the 12-member Organisation of Petroleum Exporting Countries. The nation agreed in July to accept limits on its nuclear work in return for access to oil and financial markets and is pushing to regain the oil sales it lost due to sanctions.
Companies will be able to negotiate directly for contracts with Iranian authorities and won’t be limited only to bidding, Hosseini said.
Iran won’t allow them to escape their contractual obligations if sanctions are ever re-imposed on Iran, he said, without giving details.
Iran will also require oilfield investors to team up with pre-selected local partners, he said earlier. The government has approved the new contract framework, though National Iranian Oil Co still must agree to it, Hosseini said.
Iran plans to formally present the contract on November 28-29 in Tehran, he said.
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