Iran Confident of New Oil, Gas Deals in 3 Months

EghtesadOnline: Iran is likely to finalize a number of new contracts with foreign companies to develop oil and gas fields in the next three to four months, Amir-Hossein Zamaninia, Iran’s deputy oil minister for trade and international affairs, said.

News ID: ۷۴۴۷۱۶

27 January 2018

"Iran is negotiating around 28 contracts with foreign companies, including from Japan, China, Russia and Europe," he told Reuters on the sidelines of a conference in Tokyo, Reuters reported on Thursday.

The country was hoping to complete 10 deals on new field projects by March 2018, but the plan is running behind schedule on that target, the deputy oil minister said.

The National Iranian Oil Company has signed 36 oil and gas field study agreements with local and foreign firms, according to Gholamreza Manouchehri, the company's deputy for engineering and development, Financial Tribune reported.

"NIOC has received 45 from some 100 development proposals it expects to receive for various oil and gas projects," he said.

Manouchehri said the delay in striking new contracts partly comes down to the uncertainty of internationals about Iran's energy market.

"Energy contracts have their own complications and naturally, the position each company adopts toward ongoing issues can slow down or speed up the process … but we have made good progress on some contracts," he said.

The return of international companies has been slower than expected as some banking hurdles are still effectively in place while most western investors are wary of falling foul of US President Donald Trump's efforts to undermine the Iran nuclear deal.

Tehran hopes to attract billions of dollars in foreign finance to drive its key oil and gas industry, using a new model of contracts, known as Iran Petroleum Contract that was unveiled just weeks before sanctions against Iran's economy and energy sectors were lifted on Jan. 2016.

Eni, Gazprom, Wintershall, Schlumberger, Inpex Corp and Petronas are some of the big names hoping to secure a stake in Iran's energy industry.

1st IPC Deal

Iran struck its first IPC deal with Total only in July last year, putting the French energy major at the helm of a $5-billion deal to develop an offshore section of South Pars, the world's largest gas field in the Persian Gulf.

Total was previously active in phases 2 and 3 of South Pars, but it ceased operations in Iran in 2010 following disagreements over contract terms as well as pressure from the French and US governments over oil and trade sanctions against Tehran.

Iran, the third largest producer in the Organization of Petroleum Exporting Countries, hopes its new IPC contracts will attract foreign companies and boost oil and gas production after years of underinvestment.

The new contractual framework entails more attractive terms and conditions for investment in oil and gas projects over a previous buyback model to bring back foreign investment and technology in Iran's most important economic sector.

The vast offshore gas field is shared by Iran and Qatar, where Total is also a major player in gas production as well as in oil and refining. Tehran calls the giant field South Pars while Doha calls it the North Field.