Tehran, Iran, Aug. 19
By Mehdi Sepahvand – Trend:
The Iranian government and parliament are going to discuss the Oil Ministry’s newly designed oil contracts, called Iran Petroleum Contracts (IPCs), behind closed doors.
The model of IPCs will be discussed at a closed session of the parliament with Oil Minister Bijan Namdar Zanganeh and his deputies Aug. 20, Mehr news agency reported Aug. 19.
IPC was approved on July 12 after some amendments by Iran’s Resistance Economy Headquarters to replace the old, less popular buyback agreements to attract foreign companies.
According to the Deputy Oil Minister for International Affairs and Trading Amir Hossein Zamaninia, it is expected that the first agreement with a foreign company over developing an upstream oil and gas project, based on IPC, will be signed in three to four months.
Iran unveiled the generalities of IPC in November 2015, offering 49 oil and gas projects to foreigners. Since then, some critics of the administration criticized the government “on abusing the national interests by sharing the reserves with foreigners.”
In IPC, Iran has kept its sovereignty over its hydrocarbon reserves, but payment of all direct and indirect expenses, as well as finance and operation costs will be dependent on allocating a portion (maximum 50 percent) of products or proceeds based on current day sale prices.
IPC has some advantages over the contract-based and buyback contracts.
A source in petroleum ministry, who wanted to be unnamed, told Trend July 15 that neither IPC nor PSAs share the oil and gas reserves with a foreign company (FCO), which is banned by the constitutional law.
“Iran’s newly designed contract is categorized mostly in service contracts, though it shares some terms with PSAs,” said the source.
The source added, “In legal and contractual terms, contractors will not hold stake in oil and gas reservoir or even output based on PSA. Of course, contractors will have the right to extract oil and gas [in IPC or PSA], but their ownership is defined at a certain point, for example a port, from which oil and gas is exported.”