Iran modifies oil laws to encourage participation of foreign firms

Jul 06, 2004 02:00 AM

Like Indonesia, Iran's parliament (Majlis) is changing its laws in order to entice foreign firms to participate more in its oil and gas development projects.
Iran's new 2005-10 economic development plan will enable exploration companies to develop the fields in which they strike oil and will favour companies interested in finding new fields outside the oil-rich southwest. Under the new plan National Iranian Oil Co. (NIOC) will not conduct new exploration work in the southwest.

The new legislation also loosens Iran's restrictive "buy-back" agreements, under which field developers are compensated with output before the fields return to NIOC.
Few buy-backs have been concluded under the discouraging system. Kamal Daneshyar, Head of the Majlis Energy Committee, said an ad hoc committee of Ministry of Petroleum members, industrialists, and university professors will devise methods to encourage more oil deals.

In the interim, companies from India, Malaysia, Spain, and Russia are bidding to develop Iran's North Azadegan, Kushk, and Hosseinieh oil fields under a buy-back scheme. Ali Akbar Vahidi Al-e Aqa, deputy head of Oil Engineering & Development Co. was quoted as saying foreign companies must bid by the end of September, when Tehran will select operators.
India's international firm ONGC Videsh Ltd. (OVL), New Delhi, likely will receive a 20 % stake in Kushk and Hosseinieh fields on a nomination basis. Iran would offer that share in these fields (about 60,000 bpd of crude oil) in exchange for India's purchase of 5 mm tons of LNG from Tehran when it has LNG export facilities in place.

Iran is seeking buyers for its Pars field gas and is planning three LNG projects.
Rokneddin Javadi, managing director of National Iranian Gas Export Co., said that an LNG project would take about 5 years but the company in February awarded Total, Malaysia's national oil company Petronas, and NIOC a EUR 1.6 bn contract for an LNG plant at South Pars. Finding buyers was expected to take 7-8 months.

Source: Oil & Gas Journal
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