|Iran to extend oil contracts to 20 years: official||
Iran will extend the length of its oil and natural gas field development contracts with foreign companies to about 20 years, as part of efforts to ease the entry of foreign investment and get economic sanctions on the nation lifted, a high-ranking official of Iran’s Petroleum Ministry told The Yomiuri Shimbun.
The official revealed a rough draft of the new contract system the Iranian government is devising for development of oil and natural gas fields. In addition to extending development contracts with foreign firms to 20 years from their current maximum of about 10 years, which would bring them in line with the length of contracts in other oil-producing nations, the new system would also allow foreign firms a larger share of the profits.
According to the official, the average contract period will be about 20 years, with the specific length depending on such factors as the scale of the oil or gas field involved. The government envisions a maximum period of 25 years.
The amount of profits allowed to foreign firms—currently at a maximum of about 15 percent—will also be revised.
Under the existing system, excess development costs are the responsibility of the developing firms, but Iran plans for the government to bear a certain amount of excess costs under the new system, thereby lowering the risk involved for foreign companies.
Iran has the fourth-largest reserves of crude oil in the world and the largest reserves of natural gas. However, economic sanctions prompted by Iran’s nuclear development program, as well as its disadvantageous contract system, have made it difficult for Japanese and other foreign firms to conduct development in the country.
Iran aims to have the economic sanctions on it lifted completely by July.
(Source: The Yomiuri Shimbun)
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