TEHRAN (Shana) — The panel discussion on the model of development contracts for Iran’s upstream oil and gas industry was presided over by Reza Dehqan, chief coordinator of upstream contracts at the National Iranian Oil Company (NIOC).
Behzad Mohammadi, CEO of Oil Industries Engineering and Construction (OIEC), Navid Rahbar, Managing Director of APP Dentons law firm, Jaap Kalkman, head of the Energy & Utilities Global Practice at Arthur D. Little, Vasiliy A. Mozgovoy, Assistant to General Director of PJSC TATNEFT, and Azamat F. Ismagilov, Deputy General Director for Business Development and Member of Management Board at JSC Zarubezhneft.
The panelists examined Iran’s investment risk and noted that Iran, relying on its potential in the petroleum industry, can benefit from the new model of oil contracts to develop good cooperation at the international level.
Kalkman said some countries had changed their approach in a bid to be able to attract investment in their petroleum sector.
Referring to Iran’s new model of oil contracts, known as the Iran Petroleum Contract (IPC), he said: “By benefiting from this new model of contract, Iran will be able to develop good cooperation in the world for developing its petroleum industry.”
He noted that reconsideration of approaches to petroleum industry may face resistance in certain cases, citing Indonesia and Mexico.
“Such changes have been superficial and unsuccessful in Indonesia due to pressure by political groups. They failed to cause transparency and improve procedures; therefore, they resulted in the failure of petroleum industry development,” Kalkman said.
As for Mexico, he said: “Like Iran, this country enjoys oil potential and the Mexican government was suffering from bureaucracy challenges in awarding contracts to foreign companies, but it undertook efforts to cause fundamental changes in different sectors in order to facilitate conditions for the operation of foreign companies and attraction of investment.”
Kalkman said Mexico recorded success immediately after introducing changes, adding that signs of success emerged gradually as changes took effect.
Boost Technical Potential
Mohammadi, who heads OIEC, said the IPC contracts would eliminate restrictions incorporated into buyback contracts.
“In buyback deals, we were faced with such restrictions as lack of flexibility in the master development plan and the impossibility of revision, short-term duration of contract and the impossibility of implementing enhanced recovery projects, and fixed CAPEX among others. Most of these restrictions have been removed in the new oil contracts,” he said.
“So far, 17 Iranian companies have been identified as companies qualified to work in E&P projects. Four of them have already been involved in buyback projects,” he added.
Mohammadi called for paying more attention to technical capabilities of Iranian companies, saying: “Iranian E&P companies are on the path towards favorable growth and it is necessary for these companies to step onto this path as soon as possible.”
Courtesy of Iran Petroleum