Iran's Cabinet Approves New Oil-Field Contracts to Woo Western Investors

By Benoit Faucon 

Iran's government on Wednesday approved new oil-field contracts designed to attract Western oil investors following the lifting of sanctions in January, an oil-ministry spokeswoman said.

However, Iranian officials didn't disclose the terms of the new contracts, which have long been awaited by international oil companies that once worked there such as Total SA of France, Eni SpA of Italy and the Anglo-Dutch firm Royal Dutch Shell PLC.

The spokeswoman also said the terms of the new deals would still have to be approved by a parliamentary committee in charge of reconciling new legislation with old, and signed off by the assembly's speaker Ali Larijani.

The contracts have been at the center of a struggle between President Hassan Rouhani, a relative moderate in Iran, and conservative hard-liners opposed to foreign influence. Iran had been working to revamp the terms, even before Western sanctions over its nuclear program were lifted in January.

Mr. Rouhani's oil ministry proposed new contracts that would allow foreign oil companies to at least recoup their costs and last up to 20 years. The new deals were supposed to address concerns with the pre-sanctions contracts, called "buybacks," which included a fixed lump sum and, typically, a five-year deal.

After pressure from hard-liners in recent weeks, Iranian officials have said that the contracts for working in some parts of the country would continue to resemble the buyback deals of the past.

Mr. Rouhani's cabinet approved an amended version of the contracts on Wednesday, the oil ministry spokeswoman said.

Big oil companies have been hot and cold about returning to Iran, expressing excitement about the country's oil riches but skepticism over the terms of working there.

Iran has ramped up its production by over 800,000 barrels a day since December, but the country needs to attract $130 billion in its oil and gas fields to meet its goal of raising its oil production capacity to 5.7 million barrels a day by the end of 2020.

Write to Benoit Faucon at [e-mail]

(END) Dow Jones Newswires

August 03, 2016 08:17 ET (12:17 GMT)

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