Azerbaijan, Baku, July 24/ Trend M. Moezzi
After Iraq modelled its buyback contracts on Iran's for the development of its hydrocarbon fields, the National Iranian Oil Company (NIOC) has decided to develop a new generation of buyback contracts, Mehr news agency reports.
The NIOC will soon unveil its new buyback service contracts with a transfer of management and operation of oil and gas wells to investors
As mandated in the country's Fifth Five Year plan, at least $200 billion (USD) in investments have to be made in the upstream part of Iran's oil and gas industries. Given the international sanctions Iran faces, the new buyback contracts are intended to make participation more attractive for domestic and foreign investors.
The new contracts' most important feature is that a production phase has been added to the already included development phase. That means contracts will be for longer periods of time and contractors will be involved in projects longer.
After Saddam Hussein was driven out of power, Iraq began using an edited version of Iran's buyback contract as it partnered with foreign firms to develop its oil and gas industry.
In two bidding processes Iraq signed 20 big contracts with foreign companies to develop its oil and gas fields.
The contracts include an article that ties foreign companies' bonuses to each barrel of oil that is produced. That's an incentive for those companies to use methods that produce the greatest level of extraction over the long term.