New Oil minister orders structural review of contracts

Oil Minister Bijan Namdar Zanganeh has ordered a structural revision of oil contracts, a senior oil official said. “The oil minister has issued a specific order for following up on reforming the structure of oil contracts in the country in order to invite all well-known domestic and foreign oil companies for maximizing national interests,” Abdol-Mohammad Delparish, director of consolidated planning at National Iranian Oil Company, told Shana. “At present, expert groups have been set up and the necessary studies have started to that effect,” he said. In the meantime, he added, domestic contractors are consulting Iranian and foreign experts in order to make the oil contracts more attractive for foreign investors. “We are currently studying different generations of buy-back contracts in the petroleum industry,” said Delparish “Currently, production sharing agreements are not the priority in the petroleum industry and the focus is on other types of contracts like buy-back which has already been experienced in the petroleum industry,” he added. Deplarish noted that the contractor accepts production risks under buy-back contracts. “Therefore, the more precise the production plan, the more recovery will be possible.” He said buy-back contracts will not be finalized if they do not serve enhanced recovery from oil reservoirs. Zanganeh said recently that the buy-back deals need to be reconsidered as Iran’s oil reservoirs need enhanced recovery.