TEHRAN - Iran introduced its long-awaited new model of oil contracts, known as the Integrated Petroleum Contract (IPC), in a Tehran conference on Saturday.

The IPC will replace buy-back contracts. It is expected to offer more flexible terms on oil price fluctuations and investment risks to make the sector more financially attractive.

The IPC was first supposed to be unveiled in December last year in London. 

But in September, Oil Minister Bijan Namdar Zanganeh said Iran will hold a conference to unveil its new oil contracts in Tehran instead of London. 

However, Zanganeh said, the London conference will go ahead so that the companies which miss the event in Tehran could attend it.  

During the two-day Tehran conference, oil executives from European and Asian companies including France’s Total Group, Norway’s Statoil, BP, Shell, Repsol, China’s Sinopec as well as companies from India, Pakistan and Oman, will hear about the details of the new scheme.

Iran says it needs to invest $185 billion in its oil and gas projects over the next five years.

‘IPC to bring modern technology, efficient management’

Addressing the conference, Zanganeh said the IPC would materialize the main objectives of modern technology and efficient management.

The minister said the ground is even laid for the presence of U.S. companies in the Iranian oil and gas sector.

“We did not oppose their presence. They can come and use this opportunity,” Zanganeh said, adding that he had not heard of any opposition. 

The minister conditioned the activity of any foreign company in Iran’s oil and gas projects on cooperation with an Iranian exploration and production (E&P) company.

He also said that not only does Iran welcome foreign investment in its upstream oil and gas projects, but also in the downstream projects including petrochemical ones.

Addressing the same gathering, National Iranian Oil Company’s Managing Director Rokneddin Javadi, said: “We have put just 30 percent of our discovered oil and gas reserves into production. IPC provides an opportunity for the country to fully utilize its capacity.”

In the next 25 years, about 25 million barrels per day (bpd) of oil should be added to the world’s oil production and given Iran’s ten percent share of the global oil reserves Iran “we should increase our production by 2.5 million bpd within this period of time,” the official said.

‘Sanctions affect not only Iran, but also global energy market’

Seyed Mehdi Hosseini, the chairman of Iran’s Oil Contracts Restructuring Committee, for his part, said Iran is one of the countries with the largest reserves of oil and gas in the world. Therefore, sanctions on Iran’s oil industry affected the whole consumers in the global energy market, he noted.

He mentioned the main objectives of the summit as introducing Iran’s upstream oil contracts, investment opportunities in all oil and gas sectors of the country, and Iranian companies’ capabilities in these sectors.

Low oil production cost makes IPC attractive for foreigners

In the same summit, Amir-Hossein Zamaninia, the Iranian deputy oil minister for the international affairs and commerce, said the low cost of oil production in Iran is an advantage for foreign companies.

He also mentioned some advantages of investment in Iran as transparency of business transactions and hospitable environment for foreign investment and partnership.

Iran ranks the fourth among 20 regional countries in terms of the ease of doing business, the official highlighted.

‘Iran, big player in global energy market’

Some of the foreign participants in the conference told the Tehran Times about the key role of Iran in the global energy market once the sanctions are removed against the country, although most of them said they are waiting for more details of the IPC to be disclosed.

Mohammad Khalil, the representative of UK's Xodus Group, which offers engineering and advisory support for oil and gas upstream operators worldwide, said: “I think Iran is now very attractive to the European companies and also companies from other parts of the world. I mean it has many potentialities in terms of projects and I hope that we will also learn in terms of financial incentives for the IPCs.”

“Iran is among the top five countries in the world in terms of hydrocarbon reserves. So, it has a big potential to be a big player in the global energy market. Certainly, UK companies are very interested in Iran”, he noted.

Alastair Mackie, a representative from UK’s MND Petroleum, said: “Iran’s role in the global energy market is going to be massive. Iran has one of the largest [oil and gas] reserves in the world. It’s a big player and it will become even a bigger player in the future.”

Maxim Shkurko, the head of International Relations Division of Russia’s Gazprom, said: “I think companies will come to Iran once the sanctions are removed. I think the future is quite good but of course if the sanctions are lifted. Russia is also interested in Iran.”

Ahmet Aytunur, the exploration manager in the oil and gas directorate of Calik Enerji, a Turkish company active in the oil and gas upstream business, said: “Contracts were tough previously in Iran, now that they are becoming a little more flexible, they will be welcomed by the international oil companies. We are interested in Iran’s upstream and midstream projects as well.”

There are very huge potentials and reserves in Iran and there are many opportunities in the country’s oil and gas sector, he added.

Also, representative of a Norwegian company, who declined to be named, stated: “This [introduction of the IPCs] has been long awaited. We look forward for more details.”