Iran wants to amend post-sanctions oil contracts

Sunday 29/05/2016
Iran hopes to attract new investments

TEHRAN - Iran's first vice president has asked Oil Minister Bijan Zanganeh to amend new petroleum contracts aimed at facilitating foreign investment in the post-sanctions era, a government website reported on Tuesday.

"Thank you for your efforts to take critical views into account: please present the government with your proposals for amendments for adoption as soon as possible," the site reported Ehsaq Jahangiri as writing to Zanganeh.

In November, a new model for contracts was presented at a Tehran conference attended by 183 Iranian companies and 152 foreign firms including oil majors.

At the time, Zanganeh said the new contact models were "not perfect or ideal, but an effective and responsive model for both sides".

He said Iran hoped to attract $25 billion in oil and gas investment with the new standard contract after international sanctions were lifted in January following a deal with world powers on Iran's nuclear programme.

The new Iran Petroleum Contract (IPC) was intended to replace the old "buy back" system under which a foreign firm developed an oil or gas field, but then an Iranian company took over production.

The IPC will instead launch joint ventures for crude oil and gas production with international companies being paid a share of the total output, officials said.

The Iranian partner in a joint venture must have a majority stake of at least 51 percent.

But in the months since the new model was introduced, there has been growing criticism, particularly among conservatives who say it gives too many advantages to foreign companies.

Iran's oil production has risen sharply to nearly 4 million barrels per day, around the same level before the international sanctions were imposed.

The country has doubled oil exports since the nuclear accord took effect on January 16.

A member of the Organization of the Petroleum Exporting Countries, Iran ranks second in the world in natural gas reserves and fourth in proven crude oil reserves.