ANKARA: The National Iranian Oil Company (NIOC) has signed a new-style, less restrictive, output contract with an Iranian firm, a long-awaited template for contracts it hopes will tempt back foreign investors and boost production after years of sanctions.
“The oil ministry welcomes cooperation with all companies that can ... help boost Iran’s output,” the ministry’s official website SHANA quoted Oil Minister Bijan Zanganeh as saying after the deal was signed.
“The first new model contract, the Iran Petroleum Contract (IPC), to develop the second phase of Yaran field also an EOR (enhanced oil recovery) and IOR (improved oil recovery) contracts for Koupal oil field were signed with Persia Oil & Gas Industry Development Co. (POGIDC) today,” SHANA reported.
Zanganeh said Iran will sign more IPC contracts by March 2017, but declined to give details. Iran’s semi-official Tasnim news agency said NIOC will sign the second IPC contract on Wednesday.
“Iran needs more than $100 billion investment to develop its oil sector. We welcome cooperation with all companies ... that can provide capital and the latest technologies for recovery enhancement,” state TV quoted Zanganeh as saying.
SHANA said that the value of the contract signed on Tuesday is worth $2.5 billion. The Yaran oil field is in southwest Iran, near the Iraqi border.
After reaching a landmark nuclear deal with six major powers in 2015, sanctions imposed on Tehran were lifted in January. OPEC member Iran seeks to raise its crude output to pre-sanction levels of 4 million barrels per day (bpd).
“Iran’s crude oil production capacity must reach 5.2 to 5.7 million bpd in the future,” SHANA quoted managing director of NIOC, Ali Kardor, as saying.
MORE ATTRACTIVE TERMS
Iran, which needs foreign investment to develop its aging fields, has been trying to sweeten the terms it offers on oil development contracts to attract foreign investors deterred by years of sanctions.
Hard-line rivals of Iran’s pragmatist President Hassan Rouhani have criticized the IPC, which ends a buy-back system dating back more than 20 years under which foreign firms have been banned from booking reserves or taking equity stakes in Iranian companies.
Oil majors have said they would only go back to Iran if it made major changes to the buy-back contracts, which companies such as France’s Total or Italy’s Eni said made them no money or even incurred losses.
Oil prices fell nearly one percent on Tuesday on news that Iran and Libya have continued to increase production, overshadowing an OPEC agreement struck last week to freeze output levels in a bid to stem a two-year price rout.
Zanganeh said the cooperation between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers would play an important role in stabilizing oil prices.
“The situation is getting better ... the market reaction to last week’s decision has been positive ... Non-OPEC oil producer countries can help oil price stability,” the minister said.
Iran signs first new style energy contract with a local firm
