Atta Kenare | AFP | Getty Images
A file photo shows an Iranian worker at the South Pars field in the southern Iranian port town of Asaluyeh.
Iran has revealed the framework of oil and gas contracts to lure back international oil companies, offering more flexible terms on oil price fluctuations and investment risks to make the sector financially attractive.
During the two-day Tehran Conference, oil executives from European and Asian companies including France's Total Group, Norway's Statoil,BP, Royal Dutch Shell, Repsol, China's Sinopec as well as companies from India, Pakistan and Oman, will hear about the details of the new scheme. There was also an energy adviser from the UK government, according to a western diplomat.
The Iran Petroleum Contract (IPC) officially puts an end to about two decades of a buyback system that prevented foreign companies from booking reserves or taking equity stakes in Iranian companies. Under some circumstances, the new model allows reserves to be booked, but foreign companies would still not own oilfields. Accordingly, the National Iranian Oil Company has exclusive ownership rights over resources.
"We do not claim that this is an ideal and flawless scheme but it can address the needs of both National Iranian Oil Company and international oil companies," Iran's oil minister, Bijan Namdar Zanganeh, said.
The Islamic republic, which has the world's largest gas reserves and fourth-biggest oil reserves, plans to increase its oil production capacity to about 5m barrels a day by the end of the decade from about 1mb/d since sanctions were introduced in 2012.
The new model, some details of which have been disclosed over the past year, is supposed to increase foreign companies' profits by basing the fee on the risk of the fields, allowing contracts to last for up to 25 years and putting no ceiling on capital expenditure.
Patrick Abboud
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