Iran revealed plans to offer oil development contracts that last "close" to 20 years to entice international oil companies back to Iran, according to Iranian Oil Minister Bijan Zanganeh, International Oil Daily reported.
A cornerstone of the veteran oil minister's plans to jump-start Iran's battered oil and gas industry since he assumed the post in August has been reworking of commercial terms, which companies widely criticized even before US and EU sanctions drove almost all foreign oil operators out of Iran.
He told International Oil Daily last month in Tehran that a senior body of oil experts was preparing to roll out a new type of contract for oil and gas fields at a conference in London in March, flagging the intention to lengthen the contract terms.
"The main thing in this [new] structure is the long-term involvement in Iran's oil development and operations," he told reporters in Vienna ahead of the Dec. 4 Opec meeting. When asked whether the contracts would be extended to 25 years, more in step with international standards, Zanganeh said they are aiming for "close to 20 years."
Zanganeh plans on meeting with IOCs during his time in the Austrian capital, but declined to name them.
Some majors have quietly opened communication channels with Iran, although they vow not to invest until the sanctions are lifted, industry sources say.
Iranian buyback contracts typically lasted for less than 10 years, after which the foreign company hands over operations to National Iranian Oil Co. The period of time, much shorter than most global oil development agreements, means companies are not incentivized to invest capital and bring top technology.
Industry sources in Vienna remain skeptical whether such an extension of contract length alone will be enough to attract cash from IOCs, given the wealth of oil and gas investment opportunities globally, such as shale developments in North America or offshore acreage in Africa -- both of which carry much lower political risk.
Iran has vowed to offer better commercial terms than Iraq, which locked major and Asian national oil companies into tough fixed-fee terms. But it is not clear whether Iran will open its discovered, producing world-class oil fields, as Iraq did.
So far it has indicated that it needs help with undeveloped fields that straddle international borders such as fields in the Caspian and gas developments at South Pars, which is shared with Qatar's supergiant North Field.
Separately, Zanganeh said Iran "hopes" to raise exports of crude following the interim agreement signed between Tehran and six world powers last month, but admitted it will be difficult.
He said Tehran's 2014 budget expects exports of 1.2 million barrels per day of crude and 300,000 b/d of condensate. Iran is currently exporting "more than 1 million b/d" of crude now. In 2011, Iran was exporting 2.2 million b/d of crude.
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