Production boost to define pay to foreign companies working in Iran

Business Materials 30 November 2015 14:54 (UTC +04:00)

Tehran, Iran, November 30

By Mehdi Sepahvand -- Trend:

According to Iran's new oil contracts called IPC (Iran Petroleum Contract), Iran will pay foreign companies working in the country according to the production boost they will bring, chairman of Iranian committee for revision of oil contracts Mehdi Hosseini said.

Commenting on the IPC, he said that according to this model of contracts, the foreign contractors will be paid for their operational costs in instalments, ISNA news agency reported November 30.

Any foreign company will have to work with an Iranian partner that would undertake the executive part of the job, he noted.

The key positions in a joint company formed by the foreign investor are required to be changed periodically and alternatively, Hosseini further explained.

The foreign companies would have to use Iranian resources in the areas of service, drilling, and EPC contractors with a total share of 51 percent of the project they pick, he added.

The contracts are formed to cover three areas of exploration, developed fields, and undeveloped fields, he said, adding that Iranian companies are currently able to carry out the first and second groups of projects, but the third are needed to be done by foreign companies with the required abilities.

"We lack some third-group technologies and investment. If we succeed in boosting recycling as much as one percent, we will gain five billion barrels of oil worth $500 billion," the official noted.

The IPC was introduced last week in a conference the Iranian Oil Ministry held on the occasion. Iran says the contracts are meant to be attractive to foreign companies and in the meantime avoid possible damages that Iran experienced from former kinds of contract.