Iran targets top European, US majors as upstream oil investors
Staff reports in Vienna
December 4, 2013 -
Iran hopes the biggest oil majors from Europe and the US will become
investors in its upstream oil industry once sanctions against the country are
lifted, with an initial focus on enhanced oil recovery projects, Iranian oil
minister Bijan Zanganeh said December 4.
"Total, Shell, Statoil, BP, Eni, Chevron, ExxonMobil, ConocoPhillips,"
Zanganeh said, when asked which companies he hoped would invest in Iran.
The minister told reporters just ahead of OPEC's Vienna meeting that
discussions were already under way with a number of international oil
companies but that he had not yet held talks with US-based firms.
"I myself haven't discussed with any US companies so far," Zanganeh said.
"We have no limitations for US companies."
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Following last month's interim six-month deal with world powers over its
nuclear program, Iran is looking ahead to what it hopes will be a full lifting
of sanctions in 2014, and wants to attract foreign oil companies to help boost
upstream oil production.
There have already been talks with some petrochemical companies, Zanganeh
said, "but our priority is oil companies and we are discussing with some of
Recent discussions with potential oil investors have been with
"Europeans, Americans are a little bit behind," he said.
"We have never had any problem, whether for oil purchases [by the US] or
for participation of American companies in our projects. It was their own
administration that established the sanctions and deprived their own companies
[of taking part] in our projects," he said.
New contract model
Zanganeh said the new contract model for upstream investment being
studied by Iran would be somewhere between the buyback model previously used
in Iran and a more common production-sharing agreement.
The buyback model repays companies for their investment through project
revenues but, unlike production-sharing contracts, does not confer any
ownership of reserves as the Iranian constitution bars this.
"It will be something between a buyback and a PSA, but not a PSA,"
"It will be better than the Iraqi model but close to Iraq," he added.
Major oil companies have entered into service-type contracts to redevelop
big oil fields in Iraq, guaranteeing to boost production to an agreed amount
in return for a fixed fee per barrel.
Zanganeh said details of the new contract framework would be discussed at
a conference in March in London involving representatives of international oil
companies and other experts. "Everybody is free to take part" in the event, he
On December 3 Zanganeh said he would hold talks with a number of
international oil companies while in Vienna this week, and that Iran was
considering contracts of around 20 years in duration for upstream work.
Focus on enhanced oil recovery
Zanganeh said there was a particular focus on tapping foreign investors
for their ability to recover more oil from fields already in production.
"Our priority is for enhanced oil recovery...It will be both for
undeveloped and under-developed fields, especially we prefer to start
negotiations for enhanced oil recovery, for developed and existing fields," he
"Ahwaz, Gachsaran, Aghajari, Bibi Hakimeh, Maroun, currently in hands of
National Iranian Oil Co, are such projects."
"For now we are negotiating with the European ones. We are starting by
major European companies," he reiterated.
Companies holding existing contracts for upstream work in Iran could see
those deals transferred to reflect the new contract model, he said. "If it is
required, that system will be transferred to this [new] system."
Zanganeh said the budget price for the next Iranian year, which starts
March 21, 2014, was likely to be set at $100/barrel. "I think this is what
they (parliament and government) are considering, this price basis is
reasonable for now, it is not high," he said.
The minister added that the budget was assuming minimum average oil
exports for the coming Iranian year of "not less than 1.5 million b/d."
Article continues: Analysts see limited oil price impact from Iran deal