Unveiling of 'New Oil Contract Model' at Tehran Conference

The conference introducing and unveiling Iran's 'new oil contract model' began on Saturday, December 7, with the presence of 153 foreign companies from 45 countries in Tehran. Iran plans to offer over 50 of its oil and gas fields to foreign companies based on this contract type. Bijan Namdar Zangeneh, Iran's Minister of Oil, announced during the conference that Iran will present more than 50 of its oil and gas fields to foreign companies under this new oil contract. According to the Minister, these contracts are expected to bring in $25 billion in foreign investment. The new oil contract model, the legal framework of which was published in mid-last month, is defined for 25 years, unlike previous contracts which were of the buy-back type where foreign companies would leave the project after the production phase. Zangeneh stated that many foreign companies, including European and Asian firms, are interested in investing in Iran's oil industry, and negotiations must be held with them. However, he could not specify which company is closer to finalizing a contract, although Total, Eni, Malaysian, Japanese, and Chinese companies are keen to invest in Iran's oil sector. He also mentioned that Iran is open to American companies, although U.S. firms have been barred from investing in Iran's oil and gas projects due to U.S. sanctions since 1995. Iran was supposed to unveil its new oil contract model last year in London, but after several delays, the conference was finally held on Saturday. Iran hopes that with the lifting of sanctions, it can secure the investment and technology needed to develop its oil and gas industry from foreign companies. Zangeneh noted that the cost of producing each barrel of oil in Iran is below $10 and stated that projects introduced under the new contracts will be executed through bidding. He emphasized the importance of the country's general conditions for accepting foreign investment, stating, 'If the conditions are not suitable, it is unlikely that foreign companies will come.' Meanwhile, Roknoddin Javadi, CEO of the National Iranian Oil Company, also mentioned at the Tehran conference that Iran has recoverable oil and gas reserves equivalent to 345 billion barrels, stating that 'less than 30 percent of recoverable resources have been exploited and produced so far, and the new contracts could provide a suitable opportunity to utilize existing capacities.' Iran has 158 billion barrels of oil reserves and 34 trillion cubic meters of recoverable gas reserves. More than 80 percent of Iran's active oil fields are in the second half of their lifespan, and according to the U.S. Energy Information Administration, production from these aging fields declines by 8 to 14 percent annually. In this context, Iran needs 'years of time' to revive its oil production. International oil companies are seeking 'higher profits in the Iranian market.'