Iran’s new model oil contracts, designed to lure billions of dollars in foreign investment for its energy industry, still need revisions and the government is confident the first deals will be signed within months, Oil Minister Bijan Namdar Zanganeh said.
Regulators in Iran and the country’s oil ministry reached a “partial consensus” on language in the contracts that were sent to the government’s cabinet for approval two weeks ago, Zanganeh said in an interview published Saturday by Seda Weekly magazine and Khabar Online news site.
Zanganeh dismissed suggestions the contracts had been delayed, saying “signing oil contracts takes time. It needs negotiation.” He said he expected the first contract with a foreign company to be signed “in the next two or three months or maybe sooner.”
With economic sanctions lifted in January after Iran pledged to use its nuclear program for peaceful purposes, the government is hoping to draw as much as $50 billion of foreign investment a year from major oil companies such as Italy’s Eni SpA and France’s Total SA. The oil ministry spent the past two years on a new model contract.
Iran is seeking to boost output by 600,000 to 700,000 barrels a day over five years from fields in an area west of the Karoun River along the Iraqi border, Zanganeh said. It plans to increase production from these fields by 90,000 barrels this year, the oil ministry’s Shana news agency reported on May 23, citing a letter Zanganeh wrote to National Iranian Oil Co. Managing Director Roknoddin Javadi.
The country has added 700,000 barrels a day in new output in 2016 so far, and it produced 3.53 million barrels a day in May, data compiled by Bloomberg show.
Zanganeh said changes in the investor-contract language so far involve mostly “legal issues.” The ministry removed a clause that would let the National Iranian Oil Co. offer an alternative, similar field for exploration if a foreign company failed to make a discovery in its initial site, according to the interview published by Seda and Khabar Online.
The text was revised after regulators sought to make clear domestic reserves belonged to the state, Zanganeh said. Changes also were made to reflect demands that major decisions by the managerial committee of any joint venture be approved by the national oil company.
At a Tehran conference in November, officials identified the oil fields Iran intended to offer to foreign operators under the terms of the new agreements while also announcing their general terms.
The final contracts have been delayed since first announced in February 2014, as Iran has sought feedback from potential foreign partners and government regulators. They were originally scheduled to be introduced at a London conference that was postponed indefinitely last month after several delays.