Iran to launch first tenders under new oil contract in October

Date:2016-09-02 10:22:14

Iran plans to launch its first hydrocarbon bid round using a newly revised upstream contract in October, a senior official said Tuesday.

The new contracts will be issued in the Iranian month of Mehr, which corresponds with September 22-October 21, the managing director of state-owned National Iranian Oil Co., (NIOC), Ali Kardor said in comments quoted by oil ministry news service Shana.

"In the last week of Mehr [starting October 15], we will issue the tenders regarding technical documents within the new framework of the oil contracts", Kardor said.

"South Azadegan is probably the first of the big oil fields which will be put out for tender under this framework," he said.

The oil ministry will also hold tenders to give responsibility for small and medium-size fields to domestic companies in the near future, he added.

The new Iran Petroleum Contract has been designed by the oil ministry to attract much needed foreign investment and advanced technology to the upstream oil and gas sector. It replaces the older buy-back model, which did not appeal to foreign investors due to its short-term involvement in projects and poor rates of return.

Iran hopes to raise crude oil production to 4 million b/d by the end of the current Iranian year (March 20, 2017), Kador told state television Tuesday. The oil ministry said earlier this month oil production had reached 3.85 million b/d.

Tehran is targeting an eventual 2 million b/d of new crude production capacity from dozens of upstream development projects.

However, delays to the launch of the contract, originally planned for January, have stifled interest. The delays come as Iran's parliament continues to demand revisions to the model which is seen by some as granting big concessions to foreigners.

However, Kardor said he was confident the contracts would be released soon, and hopes to sign three new deal by the end of 2016.

"In the recent days, the draft of the new model oil contracts were approved in the Cabinet and in the second step, we will work out the framework," he was quoted saying by the official IRNA news agency.

"As of next week [starting September 3], letters will be sent to international oil companies to inform them about the areas they are interested in", he said.

Japan's Ministry of Economy, Trade and Industry for example said in February it was keen to be involved in upstream opportunities, including reinvesting at the giant onshore South Azadegan field, one of Iran's prized assets. However this would depend on how attractive the new contract is compared to investments in countries such as Iraq.

Japan's state-backed oil explorer, Inpex had a 10% stake in Azadegan until 2010, when it withdrew from the development after additional US sanctions were imposed on Iran.

TypeInfo: Industry News

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