He said that presently, high crude oil supply and low demand have pushed prices down, making investors less eager to bring their capital in the oil industry.
He announced that the new model of oil contracts is an inevitable necessity for Iranian oil industry.
"Had the buy-back contracts been still attractive for foreign companies and investors, they would have flocked to Iran one year after the Joint Comprehensive Plan of Action (JCPOA) to start work in the Iranian oil industry. But has such a thing happened? No for sure. So, critics should be careful enough."
If critics have any criticism of the new model of contracts, they should offer their proposals not just go on criticizing, said the official, adding, "Such a kind of criticism is irresponsible in nature."
Referring to certain criticisms over the new model of oil contracts and the critics’ concern over such issues as preservation of ownership of reserves, supervision over contracts, and settlement with the contractor party, Iranian Minister of Petroleum Bijan Zangeneh told the parliament on Saturday that once the new model of oil contract is implemented, huge amount of activities being subject to the contracts will be entrusted to Iranian companies.
The most important difference between the new contract model and the buyback ones is that if work stops in the course of development of the field for whatever reason, there will be no payment as long as no production has come about.
Some say that the contracts will result in lesser ownership of Iran over the reserves, but the Iranian Minister of Petroleum says the new model of contracts explicitly says, “What is on and under the ground, including oil in reserves and the oil produced, are all for us and only based on what is referred to in the contract, and should also be approved by the Economy Council, a sum should be paid further in exchange for production of each barrel of more oil. Even the drilling bits used by the contractor belongs to us."
IPC is replacing buyback deals. Under a buyback deal, the host government agrees to pay the contractor an agreed price for all volumes of hydrocarbons the contractor produces.
In the wake of nuclear deal reached in July 2015, Iran has been receiving high-ranking officials and corporate executives of major companies including from Germany, Spain, Austria, Italy, and France to discuss new cooperation ventures.
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