Iran seeks $25 billion as new oil contract offer unveiled

Oil Minister Zanganeh opened a two-day conference in the capital attended by BP, Shell, Total, ENI, Repsol and OMV

TEHRAN: Iran is seeking $25 billion in investments from 50 deals involving international oil and gas companies, foreign executives were told Saturday in Tehran as the government outlined new contractual terms.

Oil Minister Bijan Zanganeh opened a two-day conference in the capital attended by BP, Shell, Total of France, ENI of Italy, Repsol of Spain, OMV from Austria and other majors.

All are weighing a return if, as expected, sanctions related to Iran's nuclear programme are lifted in early 2016 in line with a July 14 deal between Tehran and six world powers led by the United States.

The new Iran Petroleum Contract will replace "buy-back" agreements in which foreign companies were paid a set price for all oil and gas it helped Iran exploit. Iran at that point took over production.

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The IPC will instead launch joint ventures for crude oil and gas production with international companies being paid a share of the total output, officials said.

The Iranian partner in a joint venture must have a majority stake of at least 51 percent.

Zanganeh said consultations with international companies led to the new contracts, which would initially be four years in length, extendible for a further two years.

Iran will have between five and seven years to pay back initial sums invested by the foreign companies but production cooperation could go on as long as 25 years, officials said.

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"The contract models introduced today are not perfect or ideal, but an effective and responsive model for both sides," Zanganeh said, noting that $25 billion of foreign investment would constitute "success".

"Like any other human creation it may need amendment and development," he said of the new contract.

Iran has the world's fourth largest oil and second-largest proven gas reserves and its energy industry has been under-developed since the Islamic revolution in 1979.

Asked why no US companies were at Saturday's event, Zanganeh said there was no bar on them considering Iran's energy market but American firms were put off because sanctions are still in place.

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"The atmosphere and climate is ready for the presence of these companies in development of Iran's oil industry but they themselves have problems for being present in Iran," he said.

An oil embargo imposed in 2012 by the US and European Union as punishment for Iran's disputed nuclear programme -- it denies ever seeking to develop a bomb -- decimated Tehran's energy industry.

Iran produces about 2.8 million barrels per day, compared to 4.0 million bpd in 2011, following US and other Western pressure on buyers to steer clear of the country.

The nuclear deal, however, has paved the way for new tie-ups and 152 international companies were at Saturday's event, organisers said.

Despite low crude prices Iran is intent on reclaiming lost market share and has pledged to increase output by 500,000 bpd once sanctions are lifted, independent of OPEC guidance.

Iran's regional rival Saudi Arabia has refused to cut its output despite crude prices falling massively in the past year.