Iran has high hopes for slick new oil contract model
Iran's soon-to-be unveiled oil contract is designed to attract foreign investment amid the toughest investment climate in years, but what distinguishes it from the current model contract?
Iran has devised a new contract model — designed to benefit both the National Iranian Oil Company and international contractors — that it hopes will bring in billions of dollars in investments.
Unlike some other countries, Iran's oil rights can't be transferred to international oil companies. Iran has been using a unique model of buy-back contracts designed to attract international companies to invest in its oil and gas industry, but the model has not been very successful due to its limitations. So to gain access to advanced technology and international investments, Iran will soon unveil a new plan.
The new Iran Petroleum Contract (IPC) is to be presented officially in Tehran and London the week of Nov. 28-29. However, Oil Ministry officials have already explained the plan's details to Iranian MPs, experts, scholars and even the public through interviews and speeches. Mehdi Hosseini, secretary of the Iranian oil contracts revision committee, has held almost 80 meetings in parliament on the matter. Moreover, President Hassan Rouhani's administration formally adopted the contract in late September, and Vice President Es’haq Jahangiri announced its details in late October.
The IPC was developed to address shortcomings of the present buy-back model, and it is slated to replace it. Iran expects to be free soon of financial, banking and oil sanctions and hopes to attract $185 billion in investment in its oil and gas sectors during the next five years via initiatives such as the IPC.
