Iran is preparing by the end of March to start soliciting bids from international companies for rights to develop oil fields as the country looks ahead to the removal of economic sanctions that have hobbled its crude production and exports.
The Persian Gulf nation, once OPEC’s second-largest producer, wants to begin organizing bids by the next Iranian calendar year starting March 21, Seyed Mehdi Hosseini, chairman of the Oil Ministry’s Oil Contract Restructuring Committee, said Wednesday in an interview in Tehran. It’s seeking to sign oilfield-development contracts within two years at the latest, he said.
“We have flexibility in that contract to adjust,” he said. “I don’t think any two contracts will be the same.”
Iran, with the world’s fourth-largest reserves of oil, is gearing up to boost output once world powers lift the sanctions they imposed to deter the nation’s nuclear program. Oil exports fell to an average 1.4 million barrels a day last year from 2.6 million in 2011, U.S. Energy Information Administration data show.
Iran currently ranks fifth in the 12-member Organization of Petroleum Exporting Countries. The nation agreed in July to accept limits on its nuclear work in return for access to oil and financial markets and is pushing to regain the oil sales it lost due to sanctions.
Iran’s new oil contracts will allow international companies to invest for 20 years with the option of extending for an additional five, Hosseini said. Companies will share in the benefit of an increase in oil prices but must also help bear the risk of a decrease, he said.
Investors will be able to negotiate directly for contracts with Iranian authorities and won’t be limited only to bidding. Iran won’t allow them to escape their contractual obligations if sanctions are ever re-imposed on Iran, Hosseini said, without giving details.
Iran will require oilfield investors to team up with pre-selected local partners, he said earlier. The government has approved the new contract framework, though National Iranian Oil Co. still must agree to it, he said.
Hosseini presented the contract plan earlier Wednesday at a conference in Tehran attended by representatives from BP Plc, Eni SpA, Wintershall AG, Sojitz Corp. of Japan and Korea Gas Corp. as well as Iranian contracting and production companies.
Iran plans to formally present the contract on Nov. 28-29 in Tehran, he said.