New Oil Contracts Will Enliven Iran's Job Market

EghtesadOnline: New contracts in the oil and gas sector can create thousands of jobs and resuscitate the economy which is reeling from international financial and trade restrictions, says Bijan Namdar Zanganeh, the oil minister.

News ID: ۷۴۱۰۶۳

19 April 2017

"At least 100,000 direct and indirect jobs will be created this year if oil contracts are signed and activity picks up in oil and gas fields," Zanganeh said on the sidelines of a conference on the Resistance Economy, a set of policies proposed by the Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei to prop up domestic production, Shana reported.

The new model of oil contracts, dubbed as Iran Petroleum Contract, has been devised by the Rouhani administration in a bid to open up the energy sector to foreign investment and technology.

Officials say the new contracts have more flexible terms that take into account oil price fluctuations and investment risks. IPC contracts will be used to develop large-scale upstream projects, replacing a lackluster buyback model that dominated most oil and gas development projects in the past two decades, Financial Tribune reported.

"Running and maintaining an oil rig requires between 200 and 250 workers. Therefore if we have 200 online rigs, we would create between 40,000 and 50,000 direct jobs," Zanganeh noted.

He added that the new contracts will open up new opportunities for domestic producers of offshore and onshore oil and gas equipment.

Up to 70% of operational works in new contracts will be assigned to domestic companies. Tehran hopes the linkup with oil majors will boost foreign investment and transfer of technology in the key petroleum industry, officials say.

Gholamreza Manouchehri, deputy director at the state oil company, NIOC, says Tehran aims to raise between $8 billion and $10 billion a year to develop offshore oil and gas reservoirs.

He says Iran particularly needs foreign assistance and knowhow in offshore projects, where it is costlier and more difficult to tap into deep-lying hydrocarbon deposits beneath the seabed.

--- Oil, Gas Production

Iran aims to increase production from South Pars Gas Field and the West Karoun oil block, its biggest natural gas and oil projects.

"Gas output from South Pars is planned to reach 630 million cubic meters a day in the present fiscal (ends in March 2018)," Zanganeh said.

Five production phases of South Pars were launched last week, taking Iran's output from the joint field with Qatar to 575 mcm/d, and marking the first time the country out-produces its Persian Gulf Arab rival in production from the giant gas field.

The minister added that daily crude production from West Karoun, an oil-rich region in Khuzestan Province, will reach 300,000 barrels per day by March 2018.

West Karoun includes several large oilfields straddling the Iran-Iraq border, including Azadegan, Yaran, Yadavaran and Darkhoein with the first three divided into north and south projects.

The block holds an estimated 67 billion barrels of oil in place. Officials say by using advanced oil recovery methods, production from West Karoun fields can rise to 500,000 barrels a day in the long-term.

Iran is pushing with plans to play a bigger role in the global energy mix. The country sits on the world's second-largest gas reserves and fourth-biggest oil reserves, but pumps and sells less oil than rival producers with smaller deposits.