Iran preparing to unveil new oil deals
Iran says it is preparing to unveil a new format of contracts for its oil and gas projects in a forum that will be held over the weekend.
Oil Minister Bijan Zangeneh said the new model of Iran’s oil sector contracts – generally referred to as Iran Petroleum Contract (IPC) – could help solve some of the problems that the country’s oil industry is facing.
Zangeneh said the IPC deals – that will be unveiled in a conference in Tehran on November 28-29 – are expected to attract as much as $30 billion worth of new investments into the Iranian oil and gas projects.
IPC is replacing buyback deals which required the host government to pay the contractor an agreed price for all volumes of hydrocarbons it produced.
Under the IPC, different stages of exploration, development and production will be offered to contractors as an integrated package, with the emphasis laid on enhanced and improved recovery.
Experts believe that Iran’s IPC looks more appealing than the service fees which the neighboring Iraq offers. They say the IPC contains some specifications of the production-sharing agreements which will encourage investors to produce more oil and develop a field for longer terms.
Iran has already announced plans to ramp up oil production as soon as the US-engineered sanctions that bar investments in its oil and gas projects are lifted.
Officials in Tehran have made it clear that Iran will add 500,000 barrels a day to its production within a week after the lifting of the sanctions and raise it by at least another 500,000 bpd within six months.
What makes Iran attractive to foreign energy companies is the low cost of production, ranging between $5 and $10 for offshore fields and even lower for onshore.
Iran plans to boost oil production to 5.7 million barrels a day and gas output to 1.4 billion cubic meters a day by 2021.
The country has announced that it will pay foreign oil companies larger fees than it did under buy-back contracts and offer 20-year tie-ups for the first time based on mechanisms envisaged in the IPC.
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