Iran seeks $25bn as new oil contract offer unveiled
TEHRAN: Iran is seeking $25 billion in investments from 50 deals involving international oil and gas companies, foreign executives were told Saturday in Tehran as the government outlined new contractual terms.
Oil Minister Bijan Zanganeh opened a two-day conference in the capital attended by BP, Shell, Total of France, ENI of Italy, Repsol of Spain, OMV from Austria and other majors.
All are weighing a return if, as expected, sanctions related to Iran’s nuclear programme are lifted in early 2016 in line with a July 14 deal between Tehran and six world powers led by the United States.
The new Iran Petroleum Contract will replace “buy-back” agreements in which foreign companies were paid a set price for all oil and gas it helped Iran exploit. Iran at that point took over production.
The IPC will instead launch joint ventures for crude oil and gas production with international companies being paid a share of the total output, officials said.
The Iranian partner in a joint venture must have a majority stake of at least 51pc.
Zanganeh said consultations with international companies led to the new contracts, which would initially be four years in length, extendible for a further two years.
Iran will have between five and seven years to pay back initial sums invested by the foreign companies but production cooperation could go on as long as 25 years, officials said.
“The contract models introduced today are not perfect or ideal, but an effective and responsive model for both sides,” Zanganeh said, noting that $25bn of foreign investment would constitute “success”.
“Like any other human creation it may need amendment and development,” he said of the new contract.
Iran has the world’s fourth largest oil and second-largest proven gas reserves and its energy industry has been under-developed since the Islamic revolution in 1979.
Asked why no US companies were at Saturday’s event, Zanganeh said there was no bar on them considering Iran’s energy market but American firms were put off because sanctions are still in place.
Published in Dawn, November 29th, 2015