Iran is finalising a contract system to secure about $100bn of new oil and gas deals with western companies if sanctions are lifted. As Armenpress informs citing “Financial Times,” the move marks a big shift for a regime traditionally wary of of foreign groups participating in its energy sector. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail.

Mehdi Hosseini, an adviser to Iran’s oil ministry who has been drafting a new energy contract for the past two years, said he expected President Hassan Rouhani to approve it in the coming months. The current system, which prevents companies from booking reserves or taking equity stakes in Iranian companies, has proved hugely unpopular with multinationals and deterred investors even before sanctions were tightened. US oil majors, which have had no presence in Iran since the 1979 Islamic revolution, would be able to bid for Iranian oil contracts if a nuclear deal between Iran and six world powers is agreed. A talks deadline was extended this week.

The Islamic republic, which has the world’s largest gas reserves and fourth-biggest oil reserves, has plans to increase its oil production capacity to about 5m barrels a day by the end of the decade from about 1mb/d since sanctions were introduced in 2012. Details of the new contract remain vague but Mr Hosseini said it would have a “flexible fee”, address the risks of each project and take market fluctuations into consideration. Under some circumstances, reserves could be booked, but foreign companies would still not own oilfields he added.

“The value of these contracts may exceed $100bn,” Mr Hosseini told the Financial Times, adding that a London-based conference with details of dozens of available upstream offshore and onshore oil and gas projects had been delayed, probably until December, because of the “continuation of sanctions-related issues”. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. Even as companies welcomed the overhauled contracts, many were cautious.

A western oil consultant in Tehran said: “If anyone thinks negotiating with Iran over oil projects is easier than nuclear negotiations [they are] completely wrong.” Iran insists that it will regain its market share, much of which was lost to Saudi Arabia and other Gulf states, once sanctions are lifted, even if this leads to more oversupply. “Iran will not sit idle,” Mr Hosseini said. “There will be competition and Iran will adopt policies by which there should be place for us too, or there will be no place for others.”