Iran eyes inking $15 billion worth IPC contracts

Business Materials 23 February 2016 18:32 (UTC +04:00)

By Khalid Kazimov - Trend:

Iran considers signing several oil contracts worth about $15 billion by March 2017, a senior oil official said. Rokneddin Javadi, the managing director of the National Iranian Oil Company (NIOC) has predicted that by the end of the next fiscal year (21 March 2017) Iran will have several IPC contracts (Iran's new model of oil contracts) signed with international investors, Shana news agency reported. Signing the contracts does not mean that the foreign investment will be attracted at once and it will take time to lure the resources, the official added. Saying that holding tenders for IPC contracts will be time consuming, Javadi added that the new model of the contracts need to be modified. Iran's oil ministry has already called for $200 billion of investment for development of country's oil industry suggesting the Islamic Republic doesn't have enough of domestic sources to develop the oil industry, thus foreign investment is needed.

Iranian oil industry's upstream projects need $130 billion of investment while the downstream projects demand $70 billion to be developed.

In 2015 Tehran hosted 137 companies from 45 countries for a two-day conference, during which legal generalities of the new model of oil contracts (IPC) were introduced. However, some Iranian conservatives protested against the IPC suggesting the new model of the oil contract is against the Iranian constitution.

The IPC is a framework that lays out the basic structure - and some details - regarding all future petroleum contracts in Iran. It was earlier announced that the country plans to boost oil production to 5.7 million barrels a day and gas output to 1.4 billion cubic meters a day by 2021.

By holding 157.8 billion barrels of recoverable crude oil reserves, Iran possesses the world's fourth largest reserves of crude oil. The Islamic Republic also holds 34 trillion cubic meters of proven gas reserves, sharing 18.2 percent of total global gas reserves.

According to a recent report by OPEC Iran's oil production in January was estimated to be around 2.925 million barrels per day of which about 1.3 million barrels were exported.