The Managing Director of the Iranian Offshore Oil Company (IOOC), Saeid Hafezi (pictured), said Iran’s new contract models for investment in development of oil and gas fields can generate higher revenues compared to buy-back contracts.
“The Iran Petroleum Contract (IPC) Conference was successful in achieving the objectives of introduction of contracts, potentials, and investment opportunities as well as capacities of the domestic contractors,” he told Shana.
“Massive God-given potentials including hydrocarbon resources, and global developments in energy demand specially in gas as a clean fuel have provided golden opportunities for Iran’s economy,” the CEO added.
Through buy-back contracts, Hafezi said, IOOC managed to produce 1.4 billion barrels of oil and make 100 billion dollars in revenue.
“The new IPC models introduced in Tehran can generate more money for Iran’s economy,” he said.
Representatives from 137 petroleum heavyweights including Royal Dutch Shell, Total and Lukoil, to name a very few, attended the IPC Conference in Tehran.
The representatives came from 45 countries. Totally, 335 companies have participated in the two-day event to be the first to know about the contract terms.
IRNA lists the following characteristics of the new contract model:
- Companies will be allowed to sell oil abroad. This clause will allow companies to earn more if they produce more, a situation that did not exist in the past under fixed payment schemes. According to Iranian officials IPC bears risk for both sides, Iranian and foreign contractors. However, a reward system envisaged would entitle contractors to a fee per barrel that would be paid as profit to the company;
- Contractors would be entitled to an increase in profits in case of dramatic oil price fluctuations;
- Contracts could last for longer periods, estimated to be more than 20 years, whereas the previous contracts only lasted seven years;
- Foreign companies will partner with local Iranian entities;
- International companies will get higher fees to raise output;
- Contractors are not allowed to transfer oil reservoirs to other companies;
- Foreign companies can no longer dash out of their contractual obligations if sanctions are ever re-imposed on Iran;
- In terms of investment and banking costs, IPC contracts are exactly similar to buyback agreements; and
- New model of energy contracts do not require Majlis (Parliament) approval.
A follow-up conference will be held in London on 22nd-24th February.
(Sources: Shana, IRNA)