TEHRAN, Nov. 07 (MNA) – Describing features of new generation of oil contracts, deputy oil minister announced the likelihood of signing 5 big oil contracts before the incumbent government leaves office.
Roknodin Javadi explained advantages of new generation of Iranian oil contracts known as Iran Petroleum Contracts (IPC) and said, “IPC contracts, like buyback agreements, are a form of purchasing services.”
Managing director of the National Iranian Oil Company (NIOC) noted that the modifications made to the new contracts by the relevant working group have been approved by the cabinet.
“The major difference between Iran’s new oil contracts and buyback contracts remains that the developer contractor will be present for 15 to 20 years after the completion and launch of the project,” emphasized Javadi noting, “the company in charge of engineering and development of the project should be held responsible during the period because their income depends upon the revenue generated from the project rather than being subject to its completion.”
The official said International companies have welcomed the agreement; “it has always been the debate where the Iranian side claims the production quality has dropped after a short time while the foreign companies put the blame on weak maintenance and operation,” he highlighted.
“Consequently, the Oil Ministry appointed a working group to investigate weaknesses of buyback contracts focusing on longer-term presence of the developing company by forming a joint venture with the Iranian side,” underlined Javadi adding, “for companies possessing operation groups, it was decided to form an exploitation group in collaboration with the logistic and technical support of the contractor.”
He further maintained that on the basis of the new framework the developer company will enjoy reward and benefit proportionate to the increased volume of production while in terms of investment and banking costs, IPC contracts are exactly similar to buyback agreements.
Deputy oil minister announced NIOC’s plan to introduce 50 projects at the upcoming oil conference in Tehran, 20 of which are related to exploration while the rest are to do with increasing output.
“There exists a long way before these contracts go operational,” stressed Javadi expressing hope that 4 or 5 big contracts will reach conclusion before the incumbent Iranian government will leave office.
“The attendance of representatives and managers of all the world’s major oil companies at the oil conference has been finalized,” said deputy oil minister estimating that all credible Tier 1 and Tier 2 oil companies except US oil companies will participate in the conference.