For the first time since the Islamic Revolution in 1979, Iran is offering production-sharing contracts (PSCs) for investment in its upstream energy field, which involves exploration and production stage of the hydrocarbons industry.

The contracts, which allow oil companies to more quickly recoup their investment expenses than the buy-back arrangements Iran had previously favored, could help the Islamic Republic attract desperately needed new cash and expertise and alleviate the impact of draconian sanctions and competition from its neighbor, Iraq.

The National Iranian Oil Co. has offered such a contract to an Indian consortium of three companies: ONGC Videsh Ltd. (OVL), Indian Oil Corp. Ltd. and Oil India Ltd. This contract is for developing the offshore Farzad B gas field in the Farsi block in the Persian Gulf. Negotiations over developing the Farzad B gas field had been in process with the Indian consortium since early 2009.

It is estimated that the block possesses up to 21.68 trillion cubic feet (tcf) of natural gas, with recoverable reserves of about 12.8 tcf. The target production for the field's first phase would be about 1.1 billion cubic feet per day (bcf/d). In the second phase, this figure would be 1.65 bcf/d, and in the third, 2.2 bcf/d.