Iran's Oil Minister Announces Resolution of Issues in New Oil Contracts

One day before the closed session of the Iranian parliament to review the new model of oil contracts, the Oil Minister stated that the issues with these contracts and concerns from institutions like the General Inspection Organization and the Court of Audit have been "resolved." Bijan Zangeneh announced on Saturday evening, August 30, during the 'Tonight's Headlines' program on Iran's News Network that Iran's new oil contracts are "a modified and evolved model" of past contracts. Mr. Zangeneh reported that "all the raised issues" regarding these contracts have been "resolved," and the steps to correct a series of issues that were discussed in a meeting with the Speaker of Parliament have also been "reviewed." The Oil Minister also mentioned that the concerns of institutions like the General Inspection Organization and the Court of Audit regarding the new oil contracts have been addressed and their "concerns" have been "resolved." Mr. Zangeneh emphasized that in the new model of oil contracts, the extraction from shared fields with other countries and increasing the "recovery factor from the operating field" are prioritized. The Iranian Oil Minister and his deputies will speak about the new model of Iran's oil contracts in a closed session of parliament on Sunday. Behrouz Namati, the spokesman for the parliament's presiding board, announced on Saturday that reports from the committee on the compliance of government decisions with laws, the Research Center, and the Energy Commission of the parliament, which recently reviewed the new model of oil contracts at the instruction of the Speaker of Parliament, will also be read in this session. According to Mr. Namati, topics such as "preserving ownership," "the relationship between sanctions and oil contracts," "technology transfer," "attention to knowledge-based companies," "protection of oil and gas wells," and "prioritizing shared oil and gas basins" will be among the issues discussed in the parliamentary session on Sunday. The closed session of the Iranian parliament takes place while Ali Larijani, the Speaker of Parliament, had previously stated that the new model of oil contracts does not require parliamentary approval. Eshaq Jahangiri, the First Vice President of Iran, also announced on Tuesday, August 9, that the new oil contracts have been communicated and stated that "these contracts have been signed with 150 amendments and communicated to the Ministry of Oil." Two years ago, Iran introduced a new type of oil contract to foreign companies, under which the development of 49 oil and gas fields was proposed for foreign companies. Since then, some conservatives, including Ahmad Tavakoli, a representative of the ninth parliament, have strongly opposed this model of contracts. Iran has 27 shared oil and gas fields, and according to reports, Arab countries produce 7 to 8 times more oil and gas from these fields than Iran. In this context, Mr. Jahangiri has stated that some foreign countries that have shared fields with Iran are "spending money inside the country" to "prevent" the implementation of Iran's new oil contracts. Previous contracts in Iran were based on "counter-trade," where the foreign company only entered the oil project as a contractor and received its profit after the project was launched and delivered. However, the new contracts are long-term, lasting 20 to 25 years, and the foreign contracting company will have ownership of a percentage of the produced oil until the extraction of the reserves from the oil and gas fields is completed. Critics have described the new oil contracts as "a violation of national sovereignty" and "ignoring the principles of technology transfer in the proposed model." However, according to Iranian Oil Ministry officials, the new type of contracts obligates foreign companies to choose an Iranian partner for field development, and the operation of the field will be periodically exchanged between the foreign and Iranian companies. Ministry officials also state that long-term contracts will create incentives for the foreign company to increase the recovery factor of the fields and consequently increase the company's profit in the long run.