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Production-Sharing Contracts Could Help Renew Iran Oil Market

Iran is changing its oil contracts to try to overcome sanctions and compete with Iraq.
Iran's Oil Minister Rostam Qasemi (C) arrives to attend a meeting with India's Finance Minister Palaniappan Chidambaram (not seen) in New Delhi May 28, 2013. Iran has offered insurance to Indian refiners in a bid to boost its crude sales, industry sources said, though some oil executives warned the plan would not remove the threat of western sanctions. The offer was made during a visit to India led by Qasemi in a bid to revive crude sales from its second-largest customer. REUTERS/Adnan Abidi (INDIA - Tags:

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.

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