Iran to Hold Tender on 16 Oil Blocks in Hague

The National Iranian Oil Co. will put on international tender the exploration and development of 16 newly-defined oil blocks during a two-day conference later this week (January 28-29) in the Hague, Netherlands, the Iranian Oil Ministry's information network reported Sunday.

Heading the Iranian team at the forum will be Mahdi Mir-Moezzi, the managing director of the state-run NIOC. Also present will be Mahmoud Mohaddess, NIOC's director of exploration.

Mohaddess was quoted as saying some 160 people representing various international oil companies will be taking part in the conference. The NIOC will share with the participating companies its geological data and other findings on the blocks and will inform them of its technical and financial conditions, he added.

The report didn't specify the NIOC's financial basis for the contracts. However, Mohaddess had previously said that the company has chosen the buyback scheme as the preferred mode of financing the development cost.

The 16 blocks to go on tender are: Moghan I and II, Kouh-Dasht, Khorram-Abad, Kermanshah, Bijar, East/West Makran, Zabol, West Jazmourian, Saravan, Tabas, Garmsar, Saveh, Raaz and Maraveh Tappeh.

Mohaddess said the needed investment covering exploration activity will differ from one block to another, but based on the assessments done by the NIOC the average cost will be in the neighborhood of $30 to $40 million.

The participating companies will be given a period of around six months to submit their technical-financial proposals after the purchase of the tender documents, he said. The 16 blocks, located both onshore and offshore and chosen on the basis of consumption needs of the regions in which they are and proximity to oil processing facilities, encompass an area of 253,000 square kilometers. They are among an overall 51 new exploratory blocks defined by the NIOC in different parts of the country.

In a reversal of past practice and in order to improve the attractiveness of the contracts, the NIOC will be able to sign the exploration, appraisal and development phases of each block as parts of one contract.

Mohaddess had previously said if a contractor manages to come up with a commercially viable field, the NIOC will pay all the expenses incurred in exploration and development phases along with a remuneration from the sale of the production in the block whose rate will be specified in the contract.

The authorization to include the various activities of a block in one package with the same company was given by Iran's Parliament as part of the budget law for the current Iranian fiscal year which ends March 21, 2004.

Exempted from the above authorization are blocks in four oil-rich provinces in southern Iran, namely: Khuzestan, Bushehr, Kohkilouyeh, Ilam along with those in the Persian Gulf waterway.

According to reports, delays in tender procedure in the Iranian island of Kish and the Persian Gulf state of Dubai last year compelled the NIOC to shift the venue to the Hague.