Iran's Oil Ministry is to introduce a new model of contracts to replace the existing "buy back" mode of foreign investment in oil sector, head of Oil Contracts Revision Committee Mehdi Hosseini said on Saturday.
Under the new contract, foreign investors will be paid with a share of the output, Hosseini said. The move is to encourage the foreign investment in Iran's energy sector if sanctions could be lifted as the result of the ongoing nuclear talks in Vienna.
"The oil minister will soon present the new model of contracts (with foreign investors) to the administration," Hosseini was quoted as saying by the SHANA news agency affiliated to Iran's Oil Ministry.
The new contracts model is expected to encourage the quick return of major European and Asian investors to Iran's oil sector when the sanctions are removed, he said without elaborating on the details of new contracts.
Last year, Iran's Oil Ministry announced it was working on a draft model of its new oil and gas contracts to attract foreign companies to develop Iran's hydrocarbon reservoirs.
The draft dubbed "Iran Petroleum Contract" (IPC) is replacing "buy-back" contracts which were no longer attractive to foreign companies, Hosseini said. Foreign investors have been complaining about the strict terms of Iran's "buy-back" model, which they say is outdated and brings very limited profit with high risk.
Under the IPC, National Iranian Oil Company (NIOC) would set up joint ventures for crude oil and gas production with international companies which would be paid with a share of the output, he said, adding that however, "ownership of reservoirs is not transferable. "
"Under new contracts, Iranian experts will work with foreign investment companies in order to become familiar with the latest technologies in the world," he said, adding that the contracts were flexible and had been developed in accordance with the new international regulations.
Iran will need 150 billion U.S. dollars of investments in its upstream oil industry in the next five years, which calls for more share of foreign investors in the contracts as incentive.
International companies withdrew from Iran as the United States and European Union imposed sanctions on Iran's oil and gas industries during the past few years.
In 2013, Iran and the world powers started talks to settle Iran's disputed nuclear program, which encouraged hopes for an investment comeback.