Iran Approves Model Oil Contract Aimed at Ramping Up Production

  • Country to unveil terms at conference in Tehran in October
  • Government to focus on fields straddling nation's borders

Iran’s government approved a new model contract for oil and natural-gas projects as it prepares to increase output with the help of foreign investors once international sanctions are lifted.

The country’s council of ministers endorsed the model contract in a meeting chaired by President Hassan Rouhani in Tehran, the state-run Mehr news agency reported Wednesday.

Iran is preparing to bounce back from sanctions that strangled its economy and choked off investment in its oil and gas industry. Successful implementation of a July deal to curb its nuclear program would allow the country to ramp up oil exports, which fell to an average 1.4 million barrels a day last year from 2.6 million in 2011, U.S. Energy Information Administration data show.

The Persian Gulf nation will seek to boost production at oil and gas fields that straddle its borders with neighboring countries, according to the Mehr report. Iran aims to resume production of about 1 million barrels of crude a day within months of sanctions ending. Beyond that, it plans to attract foreign oil-company investment to help raise output to 5.7 million barrels a day, Mehdi Hosseini, chairman of the oil contracts restructuring committee, said in August.

Tehran, London

Oil Minister Bijan Namdar Zanganeh said Sept. 27 that the country will unveil the contracts at a conference in the capital next month. Potential investors will get more details on the 40-plus fields to be offered for partnerships at a further conference in London in February, National Iranian Oil Co. Finance Director Ali Kardor said Sept. 24.

NIOC Managing Director and Deputy Oil Minister Roknoddin Javadi has said the government will allow U.S. companies to participate in the October conference, the Oil Ministry’s Shana news website reported Wednesday.

Iran’s oil terminals are ready to handle the 500,000 barrels of daily shipments that the country plans to add as soon as sanctions are lifted, Pirouz Mousavi, managing director of Iran Oil Terminals, was cited as saying in a separate Mehr report Wednesday.

Iran, once the second-largest producer in the Organization of Petroleum Exporting Countries, pumped 2.9 million barrels of oil a day in August, putting it in fourth place, according to data compiled by Bloomberg. That compares with 3.1 million barrels a day in July 2012, when the latest sanctions were introduced.

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