Iran approves new format of oil contracts

Iran’s cabinet has sealed a new format of the country’s oil sector contracts which is hoped to bring in a considerable volume of foreign investment in the Iranian oil and gas projects.

According to Press TV, the cabinet put its seal on the new format of oil sector contracts in a session chaired by President Hassan Rouhani.

Based on the new format of contracts, the 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.

Accordingly, projects will have different stages of exploration, development and production and the contractors will be required to give a special emphasis to enhanced and improved recovery in projects.

Architects of the new contract say foreign companies can no longer dash out of their contractual obligations if sanctions are ever re-imposed on Iran. But critics have already cited certain shortcomings which they say need to be addressed by the Ministry of Petroleum. 

In late May, First Vice President Ehsaq Jahangiri told Petroleum Minister Bijan Zangeneh that the format needs some amendments and called on him to address them and report to the cabinet.   

Jahangiri also called on Zangeneh to invite all the critics of Iran’s new oil sector contracts to listen their points and include them in amendments to the new contracts.  

On a related front, Zanganeh told reporters last month that the first deals of the new generation of Iran’s oil sector contracts will be awarded within the next few months.

He further emphasized that Iran expects the upcoming awards to help increase its crude production by 600,000 to 700,000 barrels a day over five years.

SS