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Iran sets prerequisites for signing contracts with oil giants

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04 Jan 2016

Roknodin Javadi outlined Iran’s major expectations of foreign companies eager to participate in development projects of oil and gas industry during the post-sanction era; “Health, Safety and the Environment (HSE) commitment marks the main keyword in cooperation between National Iranian Oil Company (NIOC) and other oil companies.

Deputy oil minister said all foreign companies are obliged to have a deep and clear commitment to implementation of HSE standards in the upstream sector of the oil industry’s development contracts; “while respecting the requirements of the HSE, NIOC further expects an increase in the share of Iranian manufacturers in the execution of oil and gas projects,” he asserted.

“According to the country’s law, the minimum share of domestic production in oil and gas projects is 51 per cent,” noted Javadi adding “the figure in current projects being undertaken in the country adds up to 65 to 58 per cent thanks to the advancements realized over the past two decades.”

The official further emphasized that NIOC expects the share of domestic production to reach a minimum of 70 per cent adding “in addition, planning has begun to increase the share of Iranian manufacturers, contractors and advisors up to 80 per cent.”

NIOC managing director deemed transfer of knowledge and technology as the third essential condition for collaborating with international companies in Iran’s oil industry; “large companies which have worked in Iran in the past, have built most of the necessary equipment in Iran and based their representatives in Iranian factories helping the country’s manufacturers to upgrade in line with world standards.”

“Iran would certainly welcome companies interested in making investments for the productions of goods inside the country,” he stressed.

Deputy oil minister continued by stating that the framework of IPC contracts allows developer companies to enjoy a longer-term participation in contracts and projects for as long as one or two decades; “ therefore, it is expected that Iranian partners will benefit from the lion’s share in any joint project.”

Javadi further urged that the Iranian side needs to enjoy 90 to 95 per cent of the share in joint projects with foreign companies; “the figure can reach all the way to more than 99 per cent due to the capabilities of Iran.”

The official stressed that provision of appropriate infrastructures also marks a fundamental element in developmental projects and they should not be merely limited to the expansion of oil and gas fields; “accordingly, it is expected that the development proposal also consider infrastructure growth as part of expansion of hydrocarbon resources in the country leading to provision of more suitable living conditions for local residents.”

“We expect the project to develop oil and gas fields to exploit the latest knowledge and technologies as well as to implement the newest performance standards,” said deputy oil minister.

“Development of joint oil and gas fields are atop the agenda of oil industry,” maintained Javadi urging international companies to exercise a great deal of concentration in this regard.

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