News / Energy

Iran’s govt. OKs using new oil contracts

Monday, 22 August 2016 2:14 PM [ Last Update: Monday, 22 August 2016 2:14 PM ]

Iran’s First Vice President Es’haq Jahangiri says he has signed an authorization that would enable the Ministry of Petroleum to use the new format of contracts for the country’s oil projects.

Iran’s media say the government of President Hassan Rouhani has officially ordered the related institutions to start using the new format of oil contracts.

Iran’s First Vice President Es’haq Jahangiri told the media that he had signed an authorization for the Ministry of Petroleum to use the new format of oil contracts that he said had seen as much as 150 cases of corrections.

Jahangiri said those involved in designing the new contracts had done “an exceptional move,” stressing that all the flaws that the critics had identified have already been removed.

He further emphasized that the contracts will enable Iran to increase its oil and gas production, emphasizing that this will foil the struggles of those who do not want to see the progress of Iran’s oil industry.

Iran’s new format of oil contracts is replacing buyback deals. Under a buyback deal, the host government agrees to pay the contractor an agreed price for all volumes of hydrocarbons the contractor produces.

But under the new format, the NIOC will set up joint ventures for crude oil and gas production with international companies which will be paid with a share of the output.

Under the new format, different stages of exploration, development and production will be offered to contractors as an integrated package, with the emphasis laid on enhanced and improved recovery.

Officials in Tehran earlier emphasized that Iran will award its future oil sector projects through the new format of contracts before the end of the current Iranian calendar year (20 March 2017).

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