• 3 minutes Australian power prices go insane
  • 7 minutes Wind droughts
  • 11 minutes  What Russia has reached over three months diplomatic and military pressure on West ?
  • 3 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 26 mins Is Europe heading for winter of discontent with extensive gas shortages?
  • 15 mins Hopes Are Dashed For International Oil Companies In North Iraq
  • 1 day Changing Gazprom ADRs to Russian shares
  • 1 hour "The Global Digital ID Prison" by James Corbett of CorbettReport.com
  • 1 hour 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 8 hours Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 5 days "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
Offshore Drilling Is Coming Back With A Bang

Offshore Drilling Is Coming Back With A Bang

The offshore  drilling market has…

Europe's Energy Crisis Spills Over Into Food

Europe's Energy Crisis Spills Over Into Food

Excessively high energy prices in…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Iran’s Oil Production Could Take A Serious Hit If This Happens

One of the world’s most anticipated oil and gas plays just had a major setback. With officials appearing to do an about-face on opening up prime exploration ground to foreign operators.

The place is Iran — a spot that’s been on the radar for petro-majors globally since the lifting of Western sanctions.

But it now looks like the potential here might not be as straightforward as initially thought.

That’s because of comments made by a key official in Iran’s oil sector — the new managing director of Iran’s state-run National Iranian Oil Company, Ali Kardor. Who said Monday he may seek to change Iran’s petroleum contracts — in a way that won’t be popular with most foreign companies.

Kardor told an energy ministry press agency that Iran’s oil fields could be developed using “buy-back contracts”. A phrase that has a bad taste for managers in the global oil and gas sector.

That’s because Iran used to utilize buy-back contracts for foreign partnerships on its oil and gas fields. With these contracts specifying that foreign firms get paid a set fee for each barrel they pump — but that such firms can’t book ownership of in-ground reserves. Related: Abu Dhabi To Create $135 Billion Oil Giant

Former operators in Iran such as Eni and Total have said these buy-back contracts resulted in huge losses. And so observers across the oil and gas sector were very encouraged the last several months when Iran’s government said they would discard the buy-back model. And instead go with the more-regular production sharing contract (PSC) used worldwide.

Iran’s officials had been talking about PSCs as recently as a few weeks ago— when they said they would unveil details on the new contracts this month. And so this week’s revelation that buy-backs might be returning was surprising in the utmost.

Even sources in the Iranian government told Reuters they were puzzled by the comments from managing director Kardor. With some observers attributing the flip-flop to hardline opposition against President Hassan Rouhani, who has been in favour of moving to a PSC model for new oil projects.

Whatever the reason, these events raise serious doubts over the attractiveness of Iran’s upcoming bid rounds. Watch for more direction from the government on which model they will use for contracts on new projects.

Here’s to keeping it clear

By Dave Forest

More Top Reads From Oilprice.com:

 


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • Spiro Vassilopoulos on July 06 2016 said:
    This is the very same musical saw that the Iranians were playing at the National Iranian Oil Company (NIOC) conference in the summer of 1998 - I was there. The NIOC (sic. Iranian government) considers their oil and gas reserves as generational assets. So, they offer buy-back contracts but that is a fantasy as far as Western oil companies are concerned. Unless they can book reserves, western interests simply turn up their noses at anything else NIOC might offer up. Earlier this year there was another NIOC conference planned in London. After numerous enticements from the conference promoters to attend, I finally had to say to them that "I have plenty opportunities to lose money here in the US, but thank you just the same for considering me". Apparently, for the reasons mentioned in this article, along with internal squabbling at NIOC, this year's London conference was cancelled. Maybe they should increase the Chinese numbers already there. They have abundant intellectual capital that they gleaned (that is a diplomatic word) from us and the Europeans plus an infinite number of slaves to do the work. in closing, the Iranians are an intelligent lot, and instead of trying to get the Americans to come back, they can and should develop their own oil and gas reserves.

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News