Iran plans to entice more international investors into its oil & gas industry by offering more favourable terms than its neighbour Iraq, according to news site Bloomberg.
Iran is developing a new breed of contracts for international investors following the easing of western sanctions.
“Any new model will have to be win-win for all parties involved. The new contract is our own type. We haven’t given it a name,” Mehdi Hosseni, head of an Iranian cabinet review committee, told Bloomberg.
Current contracts stipulate a buy-back arrangement, where companies pay for oil & gas exploration and recoup the cost from any production at an agreed rate. Whereas the central government of Iraq, which overtook Iran as OPEC’s second-biggest member in 2012, pays investors a fixed fee for any oil they produce.
Hosseini said that Iran would look to redesign its contract terms to be more in line with international practices.
Iran, the fifth-largest producer in the Organization of Petroleum Exporting Countries, will resume negotiations with world powers over its nuclear activities on the 18th February after reaching a preliminary deal in November. The two sides seek a comprehensive accord to ensure Iran’s nuclear program is non-military, as it says, and end international sanctions against the country. Iran is losing as much as $5 billion a month in oil sales because of sanctions.
The nation needs as much as $150 billion in investment over the next five years to develop its oil and gas, and Iranian officials expect most of the money to come from foreign companies, Hosseini said.
Iran’s oil reserves of 157 billion barrels are the world’s fourth-largest, and it holds the biggest gas reserves, estimated at 1,187 trillion cubic feet, according to BP Plc’s Statistical Review published in June 2013.
