Iran needs to attract foreign investment to be able to develop its ageing oil fields, a senior Iranian oil official says.
“Only by foreign investment, could the installations of these [ageing] fields be rebuilt,” Iranian petroleum ministry’s SHANA news agency quoted Gholam-Reza Manouchehri, managing-director of Iranian Offshore Engineering and Construction Company (IOEC), as saying.
He said that Iran’s domestic resources are “not enough” for renovating oil fields which have long been producing oil.
Most Iranian oil fields are in the second half of their production cycle and enhanced oil recovery (EOR) methods are needed to recover more oil from them.
Foreign oil companies hope that a final nuclear deal between Iran and six world powers would end in the lifting of sanctions on Iran and facilitate investment in the oil and gas-rich country.
The sanctions were imposed on Iran at the beginning of 2012 by the US and EU claiming that there is a military aspect to Iran’s peaceful nuclear program; an allegation Iran categorically rejected.
The Islamic Republic and the P5+1 group of countries – the US, the UK, France, Germany, Russia and China – reached an interim agreement on the Islamic Republic’s nuclear program in the Swiss city of Geneva last November, which led to relative loosening of sanctions against Iran, paving the way for further cooperation in various economic fields, especially in energy sector, between Iran and other countries.
Following the Lausanne understanding Iran’s oil industry officials said international companies have voiced interest in taking up projects in the country’s oil industry.
Manouchehri also said Iran’s new model of oil contracts should be attractive enough to persuade foreign companies to bid for Iran’s projects.
A petroleum ministry committee has been modifying the terms of oil contracts in order to sweeten them for foreign companies. The new model, known as Iran Petroleum Contract (IPC), is replacing buyback deals.
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.