Iran’s oil sector officials are working to attract foreign investors, to revive the country’s sanction-hit oil industry.

International sanctions against the Islamic Republic were removed last year and since then the country has offered various investment packages for foreigners.

The most complicated issue for Iran is that about 80 percent of its active fields are in their second half-life and lose 0.3 mb/d of ‎their productivity annually. On the other hand, the recovery rate of Iran’s oil fields is about 25 percent.

Iran hopes to develop new projects to compensate the fall of oil output and also increase the volume.

According to the International Monetary Fund’s estimations, Iran’s crude oil output would increase from 4.1 mb/d in 2017 to 5.4 mb/d by 2022.

The country seriously needs foreign investment and technology to maintain the production level or increase it in the coming years.‎

However, it seems to be very hard for Iran to attract foreign investment, in particular through the old buy-back contract model, considering the fact that global investment in oil and gas sector has significantly decreased due to oil price fall.

A new and more attractive oil contract model, namely Iran Petroleum Contract (IPC), was designed in a bid to satisfy foreign investors. The Islamic Republic had planned to offer 49 oil and gas projects worth $100 billion (80% of which projected to be attracted from foreign funding) to foreign companies based on the new model. However no oil deal has been signed so far on the IPC basis.

However, Iranian officials say that the first IPC-based contract will be signed before end of the current fiscal year (March 2018) for development of the South Azadegan, an oilfield in West Karoun Block, shared with Iraq.

Meanwhile Iran’s oil minister Bijan Zanganeh announced on Oct. 10, that the ministry is preparing a new $5-billion worth investment package to increase the production level of the country’s active oil fields.

The package will include repairing active wells as well as drilling new wells in various oil fields located in south, offshore and border regions.

The package envisages the output increase within two years (by 2020), according to Zanganeh.

The value of each project will be up to $300 million and the invested asset will be returned through the field’s output within three years (2023).

Zanganeh said that the investment package would not be based on IPC.

The projects will be handed over to domestic firms and the Iranian companies can choose foreign partners.

No further details have been published about the package, but it seems that the ministry prefers to work with Iranian parties in this regard and foreign investors will take part in projects as sub-contractors.

Source www.azernews.az