Terms of new oil contract approved

The Iranian administration approved the revised version of a new model of upstream oil and gas contract, known as Iran Petroleum Contract (IPC), on Wednesday.

The new contract already has the approval of the Resistance Economy Command Headquarters, a top economic advisory body established last year for the post-sanctions era. The headquarters approved the IPC’s general terms in a July 12 meeting chaired by First Vice President Es’haq Jahangiri, after a number of amendments were made in the contract model.

The Ministry of Petroleum unveiled the outline of the contract at a conference in November last year in Tehran.

The global oil giants are now expected to resume business with Iran’s oil companies as the new oil contract will provide more enticing terms to the international oil companies than the short-term buyback contracts that Iran used to offer. The new contracts will last for 25 years or more, rather than the 5-10 year period of the old contracts.

Experts say the old contracts, including the buyback and the engineering, procurement, construction and finance (EPCF), will also be offered in the near future.

“I’m assuming that the government will offer IPCs for the development of the joint oil and gas fields, but for the small fields, it may offer the buyback and EPCF contracts in the near future,” Mostafa Khoee, president of Dana Energy’s exploration and production segment, said on Wednesday.

He noted that the final version of the IPC would also address critics’ concerns that domestic oil companies may not be allowed to act as an operator in upstream projects.

“Under the new contracts, Iranian companies are also allowed to independently engage in small projects, without them needing any longer to solely act as a local partner for global majors,” Khoee said.