GEO ExPro

Licensing Update - Iran

New Iran Petroleum Contracts
This article appeared in Vol. 14, No. 1 - 2017

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Structural zones of Iran. (Source: Rasoul Sorkhabi/Bruce Winslade) Despite the recent imposition of fresh sanctions by the US, Iran launched new contracts to develop its hydrocarbon resources in February 2017, its first such tender since the lifting of the original international sanctions a year ago. So far, 29 companies from more than a dozen countries are reported to have pre-qualified, but others may still apply. The list to date includes Shell, Total, Eni, Petronas, Gazprom and Lukoil, as well as companies from China, Austria, and Japan. The launch of these contracts has been delayed several times due to opposition from hardline rivals of President Hassan Rouhani.

Iran’s leaders hope that the new Iran Petroleum Contracts (IPCs) offered for development deals will encourage foreign companies and boost output after years of under-investment, but some analysts believe that the contracts are not attractive enough at a time of low oil prices, especially when compared with those offered by neighboring Iraq. International investors must team up with local partners, but the new contract model gives investors a share of the oil they produce and lets them sell it on the global market, unlike the previous buy-back deals.

A total of 40 exploration projects are available, which according to Wood Mackenzie could help recover 28 Bboe, with gas fields being the biggest projects on offer.

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