The Iranian authorities described the conditions of investment in oil production after the lifting of sanctions

The Iranian authorities described the conditions of investment in oil production after the lifting of sanctions

TEHRAN, November 28. /Spec. interviewer Gleb Bryanski/. The Iranian authorities expect from international oil companies ‘ investment in production equipment and partnership agreements with local companies. These will be key in the allocation of contracts for oil production in the country after the lifting of international sanctions.

On Saturday, Iranian officials have revealed details of new contracts for oil at 52 deposits the representatives of the world’s largest oil and gas companies, including Russian “Rosneft”, “LUKOIL”, “Gazprom oil” and “Tatneft”.

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“Any foreign company to produce oil must have an Iranian partner,” – said the Minister of oil of Iran Bijan Namdar Zangeneh.

He noted that the contracts will be a tool for the creation of new Iranian companies involved in the exploration and production of oil and gas fields. “To facilitate the establishment of such companies is the responsibility of the government,” said Zangeneh. The first contracts will be offered for tender early next year.

Another objective of the Iranian authorities in the allocation of contracts will be technology transfer, which will also be incorporated in the new model contracts.

The economy of resistance

Conference on new oil contracts held in Tehran on the eve of the lifting of sanctions against Iran, which needs to be removed from the beginning of the implementation of the agreement on the Iranian nuclear program, signed in July in Vienna.

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For many years, since 1995, USA, European Union, and later the UN intensified sanctions regime against Iran because of the program on uranium enrichment, which in the opinion of the international community, could result in the creation in Iran of nuclear weapons.

The sanctions have damaged the Iranian economy, depriving the country of the ability to sell oil in many markets and access to international capital markets. In 2012, Iranian banks were disconnected from the system SWIFT international transfers.

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In response, Iranian authorities have created so-called “economy of resistance”, which is under sanctions uses barter trade and import substitution.

Many officials who spoke at the conference, noted that the sanctions regime helped to weaken dependence of the country’s budget from oil revenues, and to achieve growth in the industries that produce Podstantsionnaya goods, in particular equipment for oil production.

Oil revenues as a driver of economic growth

According to the plans of authorities, Iran can produce 4 to 7 million barrels of oil per day by 2020. Prior to the sanctions, oil production in Iran amounted to about 4.1 million barrels per day. In this case, the export was about 2.5 million barrels.

Currently Iran, which accounts for about 9.3% of proven oil reserves and 18.2% of the gas in the world, daily produces about 2.8 million barrels. After the lifting of sanctions, Tehran intends in the next few months to increase production by 500,000 barrels a day.

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Zangeneh said that Iran plans to use the additional revenue from oil exports after the lifting of sanctions to spur economic growth.

“We’re trying to do, and that our policy is to change the approach to oil revenues so that they of means of replenishment of the budget has become a driver of economic growth,” said Zangeneh.

Compared to the contracts on the model of the buy-back which involves the sale of oil to the government at a predetermined price, the new contracts offer more favorable terms for investors, stimulating the growth of production, but given the fluctuations in oil prices.

Negotiations are negotiations

The Russian company “Gazprom” and “LUKOIL” have good chances to participate in developing oil and gas fields of Iran in the new model, said the head of Iran’s Committee for revising oil contracts of the Ministry of petroleum of Iran Mehdi Hosseini.

“Russia has a good opportunity for cooperation in the oil industry of Iran. In particular, I can mention Gazprom, which is a good candidate for working on oil and gas projects in Iran,” said Hosseini.

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LUKOIL, too, is a good candidate and has good chances to resume work at the field Sangole,” added Hosseini in an interview on the sidelines of the conference.

The Minister of oil of Iran Bijan Namdar Zangeneh previously stated that he definitely would like to see Iran in the fields of international giants Total, Shell, Eni, Statoil, BP, ConocoPhillips and Exxon Mobil.

Representatives of Russian companies expect from Iran more details on the financial terms of contracts. “I want to see how all this will work in conditions of low oil prices,” said one of the Russian participants of the conference.

The head of “LUKOIL” Vagit Alekperov plans in the autumn session of the Organization of countries-exporters of oil to meet the oil Minister of Iran zangana to discuss the return of “LUKOIL”. The Iranian side says that much will depend on negotiations.

“Negotiations are negotiations. Who will come first and will offer the best conditions, that will be the best chance,” said Hosseini.