Iran to unveil new petroleum contract

Iran will reveal the terms of its new petroleum contract and details of 51 projects to be launched in its upstream industry this weekend ahead of an anticipated lifting of international sanctions.

The Tehran Summit 2015 will be held Saturday and Sunday in the nation’s capital, a first step in the government’s bid to attract $100 billion in international investment to revive and expand its oil and gas industry.

The Iran Petroleum Contract (IPC) is slated to feature substantially improved terms in comparison to the buyback model in place prior to the 2011-2012 start of sanctions.

Under the buyback contracts, international companies would invest capital to develop oil and gas projects, with ownership reverting to National Iranian Oil Company when production began.

Sales revenue from production was used to pay back the investment, typically over a period of up to seven years, with a rate of return estimated by energy consultants FGE at 12-17 percent.

The IPC is expected to have more flexible terms, negotiated on a project-by-project basis. It will likely run for 20 years with extensions, and will require partnership with a domestic company. The local participation percentage has not yet been announced.

In a key departure from the buyback model, international revenue from a project will be tied to its production.

TOGY will be attendance at the event, which will be followed by a summit in London in February.

For more news and features on Iran, click here.