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Iran is preparing to launch the first oil and gas exploration and production tenders under its new Iran Petroleum Contract (IPC). The IPC aims to attract some US$100 billion in foreign energy investment after the lifting of Western sanctions against Tehran.
The first round of tenders is scheduled for late July, according to Oil Minister Bijan Namdar Zangadeh, and will be for the exploration of deposits in the south of the country. Zangadeh also said, as quoted by the Iranian Students News Agency, that the aim is to ramp up oil production as soon as possible, for which Iran needs “technology and management more than finances and this is why we have drafted new contracts.”
The contracts caused a lot of controversy among Iranian politicians. Conservatives in parliament claimed they represent an unjustified concession for foreign companies and that they even go against the Iranian constitution, which stipulates that a foreign entity cannot own any land or natural reserves in the country.
This particular criticism concerns the right of foreign oil operators as per the IPC to book reserves in Iran. However, all in all, the new contract is not that much different from the old one – it just envisages alternative ways for compensating oilfield operators for the production and infrastructure expertise they would utilize. In the past, some foreign companies working in Iran before the sanctions complained that they couldn’t even manage to break even there because of the buy-back contracts Tehran used to compensate them.
The new contract has been in the making for a while, and its official presentation has seen several delays because of the opposition. Zangadeh, however, seems determined to push things forward. In the most recent indication of this determination, the minister appointed his close political ally Ali Kandor head of the country’s national oil company.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.