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Iran says it is ready to offer more than 50 projects for energy exploration and production to investors so that it can return quickly to the global oil market as soon as it is free from Western sanctions.
Seyed Mehdi Hosseini, the chief negotiator for Iran’s Oil Contracts Restructuring Committee, said Iran will introduce the contracts in Tehran in November and at an energy conference in London next February. He made the announcement on Oct. 6 at the Oil and Money conference in Britain’s capital.
“Immediately after sanctions are lifted, maybe we within some months, we can add at least 500,000 barrels per day [to the world oil supply],” Hosseini said. “It does not take that long. After that we are targeting another 1 million [barrels per day]. Maybe in less than a year we can come to our pre-sanction capacity of around 4 million [barrels per day].”
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Various Iranian officials have said their country is eager to reclaim the market share lost because of Western and United Nations sanctions imposed in response to Tehran’s nuclear program, which some fear could be used to develop nuclear weapons. Iran has repeatedly responded that the initiative was designed solely for peaceful purposes.
Iran and a group of world powers – Britain, China, France, Germany, Russia and the United States – agreed in July to a deal under which the sanctions would be lifted if Tehran greatly limits its nuclear research. Since then Iran has repeatedly said it could increase oil production quickly.
Hosseini said his country’s offer of contracts opens a “new chapter of cooperation” between Iran and the global oil industry.
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The Iranian official gave no details of the projects, but Fereidun Fesharaki, the chairman of the energy consulting concern FGE, said the terms of the Iran Petroleum Contract (IPC) are likely to be more generous for investors than those offered by other oil-producing countries such as Mexico or Iraq. “Opportunities in Iran are endless,” he said.
The IPC is a revised version of traditional energy contracts, offering different stages of exploration, development and production to investors in a single document. The modifications are designed to make any deal more attractive to potential foreign investors.
Iran also plans to enter into joint ventures with the contractors to extract energy reserves and will reimburse the foreign partners with a share of production from the oil and gas fields.
Iranian energy officials say there will be plenty of oil to invest in, and potential investors haven’t waited for a formal invitation from Tehran in search of business opportunities once the sanctions are lifted. For example, France already has opened a business development office in Tehran.
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Several other European government officials have approached or are preparing to approach Iran about restoring diplomatic and economic relations. They include German Foreign Minister Frank-Walter Steinmeier, German Economy Minister Sigmar Gabriel and Austrian President Heinz Fischer.
But not all potential investors are as upbeat about resuming economic relations with Iran. One is Ben van Beurden, the CEO of Royal Dutch Shell.
“Iran holds potentially interesting promises and perspectives. We have to see how the market will develop,” van Beurden said. “At this point in time it is premature to say. Let’s wait and see what the conditions are.”
By Andy Tully of Oilprice.com
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Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com