Government Announces New Oil Contracts

The First Vice President of Iran announced the issuance of new oil contracts, stating, "These contracts have been signed with 150 amendments and communicated to the Ministry of Oil." According to Mehr News Agency on Monday, August 8, Ishaq Jahangiri, the First Vice President, said on the sidelines of a government meeting, "I signed the new contract yesterday, and it was communicated today (Monday)." He noted that these contracts are not intended to be presented as a bill to the parliament, stating, "The oil law, which is a parliamentary resolution, stipulates that the general conditions of oil contracts should be approved by the government, and the Ministry of Oil should operate within that framework." Jahangiri further explained that what has been approved by the government consists of a series of higher laws and general conditions under which the Ministry of Oil signs contracts with foreign companies. He pointed out that when the Ministry of Oil wants to conclude a contract, it must adhere to the conditions of this government resolution. Two years ago, Iran introduced a new type of oil contract to foreign companies, proposing the development of 49 oil and gas fields. Since then, some conservatives have strongly opposed this type of contract, which grants partial ownership of the produced oil to the foreign contracting company. The First Vice President continued, "We have developed a policy for fields where exploration has not yet occurred and adopted different policies for shared fields. Additionally, we have set other conditions for recovery from existing wells, and essentially, a set of principles has been established under which the Ministry of Oil must sign different contracts in various situations." Iran expects to attract $501 billion in investment in oil, gas, and petrochemical projects over the next ten years, with hopes for foreign investment. According to Iranian officials and some foreign companies, old buy-back contracts no longer hold much appeal. Jahangiri described the approval of these contracts as an exceptional action by the government. He mentioned that 150 amendments have been made to these contracts, stating, "This new contract has 15 articles, and the opinions of all those who had concerns and were seeking to develop oil capacity have been taken into account." Jahangiri referred to the "obstruction by some regional countries" in the approval of these contracts, saying, "Some foreign countries that have shared fields with us and would prefer that we do not increase our capacities in these fields are spending money inside the country to obstruct our contracts, but oil contracts will definitely be signed soon." Iran has 27 shared oil and gas fields, and reports indicate that Arab countries produce 7 to 8 times more oil and gas from these fields than Iran.