Iran to sign first major post-sanction oil deals this month

Iran will sign three oil deals before the end of the current Persian year this month which will include operation of the fields for 20 years, Managing Director of the National Iranian Oil Company (NIOC) said on Saturday.

“North Azadegan is our first experience” for development under the new Iran Petroleum Contract (IPC) model, Ali Kardor told the international exploration and production conference, Iran E&P 2018, in Tehran.

Kardor did not name the other fields, nor the companies which are about to develop the fields.

China National Petroleum Corp (CNPC) brought online the first phase of North Azadegan with 75,000 barrels per day (bpd) of output more than a year ago.  

Iran had asked international companies to bid for the second phase of development of Yadavaran and North Azadegan oilfields last year, with officials saying France’s Total, Malaysia’s Petronas, and Japan’s Inpex Corp. had presented technical surveys.

Royal Dutch Shell, Italy’s oil and gas group Eni, and China National Petroleum Corp (CNPC) were also interested in the tender, they said.

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Iran's Ministry of Petroleum expects to seal energy contracts worth more than $20 billion this year despite the threat of new US sanctions.

The first phases of the Yadavaran and North Azadegan fields as well as the North Yaran field were officially launched by President Hassan Rouhani in November 2016.

Yadavaran was launched with a production of up to 115,000 bpd and around $2 billion of investment by China’s Sinopec.

Yadavaran has reserves of 31 billion barrels of light and heavy crude oil while North Azadegan has 5.7 billion barrels of crude reserves.

For the second phases, Chinese companies were told to compete with other firms after they asked to have their contracts extended, Iranian officials said last year. 

The first phases of the oilfields were carried out under the buy-back deals which have been phased out and replaced with the IPC model of contracts. 

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Iran is touting its new energy contract model, hoping to attract foreign investment to its vast oil and gas sector after the removal of sanctions.

Iranian officials have described the IPC a more attractive contract than the buy-back scheme but Kardor said the new framework had not met their expectations. 

"We expected more deals to be signed," he said, complaining that the process of receiving licenses for new contracts was time-consuming.  

"In the new contracts, the winners of the contracts will take over the operation of the field for 20 years," Kardor said.

Buy-backs were production deals under which foreign companies recouped their costs via exports of oil and gas. 

Minister of Petroleum Bijan Zangeneh has said buy-back deals were not suitable any more for Iran which needed enhanced recovery modalities to revive its aging oilfields.  

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