Iran to reveal new oil contracts by year-end

7 August 2015 20:08 (UTC+04:00)

By Sara Rajabova

Iran’s petroleum minister has said the government plans to introduce new oil contracts.

Bijan Zangeneh said Iran will introduce its new oil contracts at a London conference planned for December, as the country seeks to boost recovery from its fields with the help of foreign companies, Press TV reported.

Under the new formula, Iran will cede exploration, development, and production operations on an oilfield exclusively to a foreign contractor. Foreign companies will be required to commit to optimal and sustainable production from the field and transfer technology.

World energy giants including Royal Dutch Shell, France’s Total, BP, and Italy’s Eni have voiced interest in Iran’s new projects.

Some of these companies have already visited the country to hold discussions with Iranian officials on a return to the Iranian market.

Energy officials have said Iran has identified nearly 50 oil and gas projects worth $185 billion up for grabs.

Zangeneh said the new contracts with foreign companies will be signed under the Integrated Petroleum Contract framework.

IPC is replacing the buyback deals that required the host government to pay the contractor an agreed price for all volumes of hydrocarbons it produced.

Under the IPC, the National Iranian Oil Company will set up joint ventures for crude oil and gas production with international companies, which will be paid with a share of the output.

Tehran has signed a package of contracts to deliver its oil in 2015, Iran’s Petroleum Ministry said a day after the country struck a deal with six world powers over its nuclear program.

NIOC said it would increase oil extraction in all of its fields for a total of 4 million barrels per day in 2015 if there is “sufficient market demand.” That is the level of crude production that the country had reached before the imposition of Western sanctions.

"We want to reach our pre-sanctions capacity. We tested a production increase in the main oilfields last year," Roknoldin Javadi, NIOC managing director told Iran's Shargh newspaper.

The country has about 30 million barrels of crude in storage, which is estimated to be some of the largest reserves in the world. Around 200,000 barrels of crude exports per day is expected from Tehran in the short-term. This will add to a surplus of about 2.6 million barrels per day.

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Sara Rajabova is AzerNews’ staff journalist, follow her on Twitter: @SaraRajabova

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