Iran’s Ministry of Petroleum has formed a Petroleum Council to oversee the award and management of petroleum industry contracts, according to local press reports on 28 December. The formation of the council marks the latest move by Iran’s Minister of Petroleum Kazem Vaziri-Hamaneh to increase the transparency of the ministry’s operations. While domestic companies are expected to be given preference in petroleum contracts under the regime of President Mahmoud Ahmadinejad, Mr Vaziri-Hamaneh has also pledged a review of the unpopular buybacks contracts system in order to revive interest among international oil companies in investment in Iranian oil and gas exploration and development (MEES, 19 December 2005).
The Petroleum Council will reportedly comprise six officials: Mr Ahmadinejad; Mr Vaziri-Hamaneh, who will act as secretary of the council; Davoud Danesh-Jafari, Minister of Finance and Economic Affairs; Farhad Rahbar, Head of the State Management and Planning Organization; Ibrahim Sheibani, Governor of the Central Bank of Iran; and the chief of Mr Ahmadinejad’s presidential office. Confirming the establishment of the council, Kamal Daneshyar, Chairman of the Majlis Energy Commission, told reporters that the council’s duties would include the assessment and review of new petroleum contracts, the revision of previous contracts, and the supervision of new ones. He said the new body was intended to reform previous methods of awarding contracts in order to improve the protection of national interests.
Karanj And Parsi Development Projects Awaiting Revised Contract Terms
The National Iranian Oil Company (NIOC) is planning to award contracts for further development of the Karanj and Parsi oilfields once the status of oilfield contracts has been clarified by the government, according to NIOC Project Director Bahman Samimi. He said on 6 January that the company was holding off on inviting bids pending government decisions on new forms of contract, including the promised revision of buyback terms. He added that NIOC aimed to increase Karanj production capacity from 220,000 b/d to 300,000 b/d, and Parsi capacity from 100,000 b/d to 150,000 b/d. The development projects are among many being undertaken and planned by NIOC to overcome natural reservoir decline in older fields and expand overall capacity (MEES, 2 May 2005).
Sinopec Lined Up By NIOC For Garmsar E&D License
China’s Sinopec has been selected by NIOC to become the operator of the Garmsar exploration and development (E&D) license area, one of 16 offered under revised buyback terms in early 2004 (MEES, 2 February 2004). Garmsar is the fourth of the 16 blocks to be lined up for E&D work by NIOC, although none has yet been given final approval by the NIOC board. Earlier unofficial E&D license agreements have been with Norway’s Norsk Hydro for Khoramabad (MEES, 7 November 2005), China’s CNPC for Kuhdasht (MEES, 30 May 2005), and Thailand’s PTT for Saveh (MEES, 9 May 2005). The Garmsar tract covers 12,183 sq km, and NIOC’s minimum work requirement includes the reprocessing of 630 line km of 2D seismic data, the acquisition of 400 line km of 2D seismic data, and the drilling and testing of one well.
Mr Vaziri-Hamaneh announced on 10 January that the government’s Economic Council had approved plans for exploration and development of the Garmsar and Khoramabad blocks, and had instructed the ministry and NIOC to press ahead with the projects. However, he added: “We have to hold fresh talks with our contractors because the Economy Council has introduced changes to the NIOC proposals.” Sinopec was said to have estimated that spending on Garmsar E&D work would amount to $19mn, while Norsk Hydro was said to have estimated Khoramabad outlay at $49.5mn.
