Iran to modify oil laws, encourage foreign investment

Iran's Majlis (parliament) is changing its laws in order to entice foreign firms to participate more in its oil and gas development projects.

Iran's new 2005-10 economic development plan will enable exploration companies to develop the fields in which they find oil and will favor companies interested in finding new fields outside the oil-rich southwest. Under the new plan National Iranian Oil Co. (NIOC) will not conduct new exploration work in the southwest.

The new legislation also loosens Iran's restrictive "buy-back" agreements, under which field developers are compensated with output before the fields return to NIOC.

Few buy-backs have been concluded under the discouraging system.

Kamal Daneshyar, head of the Majlis Energy Committee, said an ad hoc committee of Ministry of Petroleum members, industrialists, and university professors will devise methods to encourage more oil deals.

Buy-back projects

Meanwhile, companies from India, Malaysia, Spain, and Russia are bidding to develop Iran's North Azadegan, Kushk, and Hosseinieh oil fields under the buy-back scheme.

Petroenergy Information Network quoted Ali Akbar Vahidi Al-e Aqa, deputy head of Oil Engineering & Development Co., as saying that foreign companies must bid by the end of September, when Tehran will select operators.

India's international firm ONGC Videsh Ltd., New Delhi, likely will receive a 20% stake in Kushk and Hosseinieh fields on a nomination basis, PIN reported. Iran would offer that share in these fields (speculated at an equivalent oil production of 60,000 b/d) in exchange for India's purchase of 5 million tonnes of LNG from Tehran. Iran is considering several LNG export project proposals.