Oil contracts should serve both parties

TEHRAN May 21 (Shana)–The head of National Iranian Oil Company (NIOC) has said that Iran should modify the terms of oil contracts so as to benefit both contractor and host government.

“The contracts should be modified so as to guarantee profits for both contractor and host government while being invulnerable to market fluctuations,” Rokneddin Javadi said.

He said that inclusion of certain clauses in the contracts could avoid future problems regarding foreign exchange rate fluctuations.

Iran is introducing a new model of contracts, known as Iran Petroleum Contract (IPC) to replace “buy-back” contracts which, he added, are no longer attractive to foreign companies.

Under a buyback deal, the host government agrees to pay the contractor an agreed price for all volumes of hydrocarbons the contractor produces.

But under the IPC, National Iranian Oil Company (NIOC) will set up joint ventures for crude oil and gas production with international companies which will be paid with a share of the output.
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