(Bloomberg) - Iran is expected to approve a new model for oil contracts on Wednesday, as part of a push to attract billions of dollars of foreign investment to help rebuild its energy industry.
“We are awaiting government approval due to be out on Wednesday,” Oil Minister Bijan Namdar Zanganeh said at an energy conference in Tehran on Monday. “Our priorities will be jointly owned oil and gas fields, as well as those in which we are after improved oil recovery.”
Iran has been working on the oil contract model for the past two years. The Persian Gulf country hopes foreign companies will invest as much as $50 billion a year in its oil sector. Major European oil companies such as Italy’s Eni SpA and France’s Total SA have expressed an interest in developing Iran’s oil and gas fields.
“We’ll be into next year before we see any significant activity on the ground,” said Robin Mills, chief executive officer of Dubai-based consultant Qamar Energy. “For a tender you really want three bidders at least per project and I’m not sure they have a competitive enough situation.”
Details to look out for in the contract include legal clauses related to halting work if sanctions are re-imposed and taxes, Mills said. “Various international oil companies have been contributing to discussions and reviewing it.”
ENI didn’t respond to a request for comment on its interest in Iran and Total didn’t immediately return a call.
In an interview with Iran’s Seda Weekly magazine published in June, Zanganeh said the text of the investor contract makes clear that domestic reserves belong to the state. Changes were also made to reflect demands that major decisions by the managerial committee of any joint venture be approved by the Iranian national oil company.
Iran was producing more than 4 million barrels a day before international sanctions were intensified against the country in 2012 because of its nuclear program. Since the restrictions were eased in January, Iran lifted crude production to 3.5 million barrels a day from 2.8 million barrels a day at the end of last year, according to data compiled by Bloomberg.
To contact the reporters on this story: Hashem Kalantari in Tehran at firstname.lastname@example.org; Sam Wilkin in Dubai at email@example.com To contact the editors responsible for this story: Nayla Razzouk at firstname.lastname@example.org Claudia Carpenter, Glen Carey
Copyright 2016 Bloomberg News.
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