Iran Gives Investors Glimpse of $30 Billion in Oil Deals
(Bloomberg) -- Iran is targeting about $30 billion in investment by offering 70 oil and natural gas projects to international companies as the Persian Gulf country anticipates the lifting of economic sanctions.
Iranian officials presented the projects at a two-day conference in Tehran as part of an effort to attract more than $100 billion to revive the energy and petrochemicals industries and generate much-needed government income. Oil Minister Bijan Namdar Zanganeh introduced them along with a new type of investor contract offering better incentives than the buy-back agreements Iran offered in the past. The work covers 52 production and 18 exploration projects, both onshore and in the Gulf and Caspian Sea.
Iran is offering a negotiable framework for new oil deals rather than a uniform contract for all investors, Roknoddin Javadi, managing director at National Iranian Oil Co., said Saturday in Tehran. The government may modify the framework and plans to present more details in February at a conference in London, Seyed Mehdi Hosseini, chairman of the ministry’s Oil Contract Restructuring Committee, said Sunday in an interview.
Here are five things to know about this turning point in Iran’s campaign to upgrade its energy industry:
* The new investor contract will give companies a share of the oil they produce and let them sell it globally, Hosseini said in Tehran. International companies will be paid in cash or in kind based on a fee per barrel, Talin Mansourian, a consultant with Hosseini’s committee, said Saturday. Iran would reduce the fee if oil prices fell by more than 50 percent and increase it if prices rose by a corresponding amount, Mansourian said.
Iran’s old buy-back deals paid companies a fixed fee regardless of how much oil they produced and offered them no incentive to exceed output targets. Buy-backs also paid no compensation to companies that spent more than budgeted amounts to develop a field.
Under the new contracts, the NIOC won’t limit capital spending and will approve budgets on a yearly basis, though companies still won’t receive a higher fee if they produce above their output targets, Hosseini said.
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