A potential oil and gas opportunity emerged last week in Romania. When that country’s government liberalized pricing and exports for natural gas— which could see producers here getting better rates and making higher profits.
But elsewhere, one of the world’s most highly-anticipated new energy opportunities appears to have hit a snag.
Oil and gas in Iran.
Iran’s oil minister Bijan Zanganeh said yesterday that Iran’s new petroleum contracts for international operators are up in the air again. Noting that approval of the new model for taxes and profits on foreign-controlled projects is now stuck in review with top security officials.
Zanganeh told local press that Iran’s Supreme National Security Council is looking at the proposed new contracts. With that body representing the highest security agency in the country.
The fact that such a high-level group is examining the petroleum contracts is a new and unexpected development. Coming after the contracts have faced substantial opposition from conservative factions inside and outside Iran’s government.
This review by the Security Council could be the latest move by hardliners to derail the new contract model. Which has been criticized for giving away too much ownership to foreign operators.
Major E&Ps have said they need concessions on ownership and profits in order to return to Iran. With the new model representing a substantial improvement on Iran’s former fiscal regime — which operated under a “risk service” arrangement, where international firms could not own equity stakes in projects or book reserves. Related: OPEC Can’t Stop The Beat: U.S. Adds 10 Oil Rigs
The move to a more attractive fiscal regime has been pushed by Iran’s moderate government. With officials already having prequalified 29 firms for bidding on Iranian projects as part of a planned license round this year.
If the current security review trips things up, interest from those companies will dry up fast. Watch for the outcome from this critical standoff over the next few weeks — although no timeline has officially been given for a decision from the Council.
Here’s to locking it down.
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Dave Forest
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