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Iran’s New Oil Contracts Are Nearly Upon Us

Iran Oil

I returned from an unexpectedly-extended trip in the Zambian Copperbelt to find that one of the year’s most-anticipated oil and gas happenings is nearly upon us.

That’s the award of new petroleum projects in Iran, with the government saying yesterday that it is nearly ready to start handing out licenses under a brand new fiscal structure for the country.

Local news sources quoted Ali Kardor, managing director of state-owned National Iranian Oil Co., as saying that Iran’s new contracts are now ready to go, with Kardor adding that the government will issue tenders for several oil and gas fields during the week of October 15.

The details on the fields to be offered should be available even sooner than that. With Kardor saying that letters describing the available areas will be sent to “international oil companies” starting September 3.

Officials have indicated that one of the prizes from this bid round will be the South Azadegan oil field. A proven project that Iranian authorities claim could host over 5 billion barrels of recoverable oil.

Up until now, production from South Azadegan has held at around 50,000 barrels per day. A mark that the Iran government claims can be increased to as much as 600,000 b/d through a development program in concert with foreign investment.

The project however, has already failed to gain traction under joint ventures with both Japanese and Chinese backers. Raising the question of which companies might bid for the field as part of the upcoming licensing round. Related: Yemeni Rebels Claim Unconfirmed Second Strike On Saudi Aramco Oil Facilities

Equally interesting will be to see the exact terms Iranian officials will offer to foreign companies here, with there having been a lot of speculation about details on the country’s new contract model — but few concrete numbers released yet.

In fact, it’s not clear if Iranian officials actually know the details yet. Managing director Kardor told the press that the new contract model had been approved by Iran’s national cabinet in “recent days”. He also added that the framework for the new model is still to be worked out.

All of which makes this a potential down-to-the-wire race to get these deals done. Watch over the next six weeks to see if the government can do it, and what the terms might be. If they can pull it off, watch for the identities of the winning bidders — which will reportedly be determined before the end of the year.

Here’s to getting ‘er done,

By Dave Forest

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