Azerbaijan, Baku, Sept. 4 / Trend, D.Khatinoglu/
Iranian Oil Ministry aims to revise the types of contracts and review the possibility of new type contracts with foreigners in oil and gas sector.
Only buy-back contracts in Iran's oil sector have been allowed legally and Iranian Oil Ministry has had experiences in signing buy-back agreements with Total, Eni, Royal Dutch Shell and Statoil.
The former director of the International Petroleum Exchange Chris Cook told Trend that Iran has typically offered 'buyback' contracts to international oil companies as opposed to the production sharing agreements (PSAs) which they prefer.
Cook who serves as a strategic market consultant, entrepreneur and commentator says that PSA terms which are acceptable to the International Oil Companies (IOC) tend to be unacceptable to National Oil Companies (NOC), and Iran's bargaining position is not strong.
"But of course the key problem is that thanks to sanctions, dollar payment under PSA agreements is practically impossible", he said.
Aside from internal law-related restrictions, Iran's Central Bank and oil export has been facing western sanctions, while the U.S. banned any significant investment or supplying equipments in Iran's oil sector and foreign companies were forced to leave Iran.
Cook proposed that Iran can use of 'capital partnership ' production sharing/consortium agreements combined with the use of the simple 'prepay' funding instruments (credit instruments which pre-date modern banking) currently being heavily used by Russian oil companies like Rosneft.
Prepay is the forward sale of unit production entitlements at a discount.
According to Cook, it is possible for Iran to enter into 'swaps' of oil or oil product entitlements in exchange for value such as goods and services or commodities.
Regarding currency-related sanctions over Iran, Cook said that the clearing of such credits does not require US dollars except as for pricing reference for these transactions, and by doing so Iran would transcend sanctions.
"So IOCs could engage with Iran by accepting such energy credits in exchange for their valuable goods and services, and could sell these credits in due course to customers of Iran's production of oil, oil products or even gas or petrochemicals", he said.