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Iranian Petroleum Contract

Energy PioneersIran Oil and Gas Monitor

Last Updated: September 2014

Iran Petroleum Contract


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Disclaimer: All information contained in this publication is English translation of retrievals of publicly available sources, believed to be accurate and reliable at the time of publishing. Energy Pioneers Ltd. accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication.

The Iranian upstream contractual framework: IPCs general terms and structure

After many upheavals, political oppositions and amendments, the general terms and structure of

the Iranian upstream oil and gas contractual framework was ratified in September 2016, and the

government subsequently announced it plans to hold the first round of tenders under this

framework in November 2016.

Since their initial launch in November 2015, and as a result of acute opposition by conservative

groups to some of its terms, the contracts underwent numerous rounds of revisions and

modifications which at some point were also demanded by the country’s Supreme Leader,

Ayatollah Khamenei.

The general terms, as approved by the Cabinet under 3 Resolutions, involve many uncertainties

over how exactly such terms could be embedded in a final draft contract in order to fulfil the

objectives of both sides; i.e. enforcement of the state’s sovereign right and complete ownership of

oil and gas reserves by the nation, transfer of technology and empowering the Iranian companies

(demanded by the Iranian side) and a low-risk, profitable and stable operation in Iran (long-aspired

by foreign companies).

While there seem to be a relatively long way to see the exact terms of IPCs, it is likely that the

drafting and finalisation of such terms will take place through bi-lateral negotiations with the very

first bidding parties. It is important, however, to remain reasonably optimistic that despite all the

hurdles, a major step has been taken forward to both maximise the country’s massive potential and

also address concerns of participating oil companies at the current dark days of international oil

markets. Constructive contributions from experienced and competent experts from within and

outside the government could facilitate the transition process for the Iranian oil industry from an

underdeveloped, isolated sector to an advanced, dynamic and interactive one.

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A) IPCs resolutions

There are 3 resolutions approved by the government with regards to IPCs (Resolution No. 52445D/

104089Y of November 2, 2015; Resolution No. 53376 D/57225Y of August 6, 2016 and Resolution

No. 53421D/69978Y of August 31, 2016).

The first Resolution, which had set out the preliminary terms of the IPCs, was severely opposed to

by the critiques. As a result it was replaced by the second resolution of the Cabinet Minister ratified

in early August 2016 (See full text of the 2nd Resolution in Section B below). The second resolution

encompassed provisions and policies regarding the country’s oil and gas sector, as enacted in the

Economy of Resistance Policies and the 6th Five-Year Development Plans approved by the Supreme

Leader.

The terms of the 2nd Resolution were, however, further modified under a 3rd Resolution within less

than 2 weeks from the ratification of the 2nd one to fully address and incorporate the concerns of the

critiques and opposition groups. The 3rd Resolution gave birth to the final structure under which

IPCs are planned to be offered to local and foreign oil and gas companies (See full text of the 3rd

Resolution in Section C below).

B) 2nd Resolution: The general terms, structure and model of upstream oil and gas contracts

Article 1: The following terms used in this Resolution shall be interpreted according to the

definitions provided in this Resolution and other terms that are not defined in this Resolution shall

follow the definitions adopted in the Petroleum Law -1986 (amended in Oil Law Reform in 2011),

and definitions adopted by and subject to Iranian laws and regulations, as well as definitions and

terms adopted within the international oil industry, applicable laws to the petroleum contracts, as

well as the Constitution of the Islamic Republic of Iran.

A) General terms: principles and general terms and structures governing upstream contracts

B) Oil: Hydrocarbons in form of crude oil, condensate, natural gas, natural bitumen, oil sand and

rocks discovered in natural conditions or through upstream operations.

C) Oil and Gas Field: Any field or reserves, underground or surface within the geographical

divisions of the country or inland waters, coastal, offshore and international waters, adjacent to the

country borders, that are likely to have oil, and its technical specifications and geographical

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coordinates determined and logged by the Ministry of Petroleum.

D) Commercial field or reservoir: a field or reservoir, which through compliance with optimal

production regulations and current economic conditions and operating methods, to be capable of

producing oil with enough net income to cover the direct and indirect expenditures of operation and

foreseeable expenditures for exploration, development and operation, as well as the ability to cover

remunerations and profit of the second party, and other external expenditures accumulated during

the timeframe of the contract, and is expected to produce revenues for each of the contracting

parties, (operate cost-effectively) and generate enough revenues.

E) Green field: An oil or gas field discovered by the National Iranian Oil Company or by other

companies for the National Iranian Oil Company (NIOC), which is ready to enter the development

stage.

F) Brown field: An oil or gas field that has already proceeded to operation and production stage.

G) Reservoir: Any subsurface rock formations or anticlines, containing natural accumulations of

movable hydrocarbons that is confined by impermeable rock and characterised by independent

pressure system.

H) Brown reservoir: Reservoir with history of commercial hydrocarbon production.

I) Green reservoir: Discovered Reservoir from which, to date, no hydrocarbons has been

commercially produced

J) First party to the Contract: NIOC or any of its subsidiaries as the representative of the

company, which are also referred to as “Employer/Client” in this Resolution.

K) Second party to the contract: The company or companies qualified as petroleum specialists for

performing either one or all of the following, including exploration, characterisation, development

and operation and implementation of enhanced recovery projects, stipulated with condition of

providing all of the required financial resources, selected through relevant legal process, and have

signed the contract. Second party to the Contract is also referred to as “the Contractor” in this

Resolution.

L) Exploration block: A defined geographical area for oil exploration activity specified by NIOC

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and approved by the Ministry of Petroleum, and specified in the contract for the second party/

contractor to undertake exploration of commercial field or reservoirs.

M) Minimum exploration obligation: This includes variety of operations such as geological

surveys, gravity surveys, seismic studies, drilling and reservoir evaluation intended for discovery of

commercial fields and reservoirs, with the minimum expenditures and specific period provided in

the contract to which the second party of has committed to.

N) Development plan: Development plan are negotiated and approved by the parties tp the

contract, outlining the development of green fields or reservoirs or for increasing production of

brown fields or green reservoirs by conducting enhanced recovery projects, with the possibility of it

being reviewed during the development or production process according to the new findings on the

actual behavior of the fields or reservoirs.

O) Initial production: The defined production capacity to be achieved in the first stage of

operation of the development of green field/reservoirs as agreed in the Development Plan by parties

to the contract, or the additional output to be achieved in the first stage of enhanced recovery

operations for improving the brown fields/reservoirs, as agreed in the Development Plan by the

parties to the contract.

P) Direct capital expenditures: All of the capital expenditures required for development,

improvement or enhanced recovery of reservoirs, including expenditures for management,

engineering, drilling, construction of necessary surface and subsurface installations for development

of the field, including processing plants, injection, transfer, auxiliary and processing facilities, and

all other related setup units, as well as expenditures for exploration operations for determining the

commerciality of the field, and for maintenance, restoration and renovations of reservoirs and fields

that are in production phase.

Q) Indirect expenditures: Includes costs, such as taxes, duties, customs and social security

insurance, paid to the government, ministries and public institutions, including, municipalities.

Note: Payment of taxes, duties and other types of authorised expenditures, as well as settlement of

payments with stakeholders are contractual obligation of the second party to the contract. The

payments received by authorities are accepted exactly as indirect payments, and as stipulated by this

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Resolution, the second party to the contract will be reimbursed accordingly.

R) The costs of finance: the costs of finance of the second party to the contract, based on terms

and conditions determined in the contract.

S) Operation costs: All of the ongoing expenses which the second party to the contract, pays for

performing operations, according to the terms stipulated in the contract, as well as based on

accounting standards.

T) Remunerations: A figure proportional to a barrel of crude oil produced additionally (or every

additional thousand standard cubic feet of produced associated gas) from oil field/reservoirs, or

every additional thousand cubic feet of standard natural gas produced from gas fields/reservoirs, or

every additional barrel of condensate gas produced, as the outcome of the performance of the second

party to the contract.

U) Depletion base line: Refers to the line or curve of depletion trend of the field/reservoir with

existing installations and in the event of non-implementation of new initiatives for improving and

enhancing recovery (EOR, EGR, IOR, & IGR), which are agreed upon by the first and second party

of the contract.

Note: The depletion base line must be approved by the Engineering Council of Oil Reservoirs.

Responsibilities, structure and method for appointment of its board of decision-makers are

determined by the recommendation of Petroleum Minister, and approval of Ministers Cabinet.

V) Additional produced oil, gas or condensates: The amount oil, gas or condensates produced

from the green fields or reservoirs, or amount of oil, gas or condensates produced from the brown

fields/reservoirs exceeding the depletion base line.

Note: In an event where enhanced recovery is performed in brownfields, depletion base line can be

the basis for calculating the additional produced condensate gas.

W) Improved recovery rate operation: a combination of operations which would lead to

maintenance of production level or improvement in the recovery rate or acceleration in production

(increase in depletion rate) and could be delayed in all level of production throughout of the lifespan

of a field or reserve (such as complimentary seismic studies, oil and reserves engineering,

geophysics project, 3D or 4D seismic studies, design and execution of projects as new drillings

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for sophisticated method for Gas Lift in the field or reserve, fracturing in the reservoir, deployment

of well pumps, improvement in drilling methods and maximum utilisation from horizontal drilling

and so on.

X) Enhanced recovery rate operation:

Enhanced recovery rate of oil: deployment of various up-to-date and advanced technologies in the

world including studies and design of reservoir and operation engineering methods, deployment of

various types of injections in accordance with a field or reserve’s requirement, including injection of

gas, water, steam, chemical, polymers, CO2 and so on. If required, application of complimentary

technologies in each phase and similar technologies which lead to increase in the rate of recovery

and optimizing oil, gas, and condensate production throughout the lifecycle of a field or reserve.

Enhanced gas recovery rate: deployment of various up-to-date and advanced technologies in the

world which would lead to increase or stabilization of the reservoir or field’s pressure and also

maximum shift and as a result leading to increase in rate of gas recovery from the field or reserve.

Y) Contractual area: a geographical area with specific coordinates, which is stipulated in the

contract for execution of the subject of the contract.

Z) Uncapped capital costs: flexibility of the capital costs in relations to the actual behaviour of

the field, the actual market dynamics within the approved annual operation financial plan and also

the requirement for further necessary investment in order to enhance the efficiency and productivity

of the field.

Z.2) Annual operation financial plan: a plan prepared by the second party to the contract and

approved by the second party within the structure of operation projects and the required

amendments and revisions in accordance with the projects’ realities and actual behaviour of the

field. The approval of this plan by the first party to the contract is final and will be communicated to

the second party to the contract. This plan includes details on the costs and required annual

operation for the development and exploitation.

Article 2: the contract subject of this Resolution are divided into 3 categories:

(A) First category: exploration contracts and in an event of a commercial field or reservoir

discovery, the development of the field or the reserves and then exploitation of such a field or

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or the reserves and then exploitation of such a field or reservoir in such order and during the term

stipulated in the contract. In this category, the assignment of development and exploitation activities,

integrated with the exploration activities, should such activities lead to a commercial discovery of a

field or reserve, is permissible to the second party to the contract, giving due consideration to the

optimal production plans from the oil and gas field. In this contracts category, the minimum

commitments of the bidding company for operation and investment in the exploration area shall be

clearly determined and committed by the second party to the contract.

B) Second category: the development contracts of the fields or discovered reservoir and following

to that, their exploitation in order and during the term stipulated under the contract.

C) Third category: the enhanced or improved oil recovery contracts (EOR/IOR/EGR/IGR) in the

operational fields or reservoir in accordance with the reservoir engineering studies and following to

that, their exploitation in order and during the term stipulated under this contract.

Article 3: In all the contracts signed in accordance with the provisions of this resolution, below

principles will be governing:

A) Enforcement of the right of sovereignty and public ownership of all oil and gas reserves

through the Ministry of Petroleum of the Islamic Republic of Iran.

B) No guarantee by the government and Central Bank of Islamic Republic of Iran and state banks

for commitments made under this contract.

C) Repayments of all direct and indirect expenditure, costs of finance and development costs and

remuneration payment will be done through allocation of a portion of the additional production of a

field (as per provisions of Note C of Article 6) or revenues gained as a result of the execution of the

contract in accordance with the market price of the product and the decision to pay the contractor

through delivery of the field or reservoir’s production or its revenue instead of the product (up to the

termination of the repayment periods/payment of contractor’s claims) is by NIOC.

Article 4: In order to transfer technology and advance national technological capabilities in

upstream oil and gas operations and execute mega projects and enable Iranian companies to operate

in mega domestic projects and participate in regional and international markets, the following points

shall be implemented:

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A) In every contract, depending of the circumstance, Iranian Exploration and Production (E&P)

company/companies whose credentials are approved by NIOC in accordance with the terms and

principles stipulated by the Ministry of Petroleum, shall participate as the partner of the competent

foreign company/companies and through their participation in execution of the contract, the

opportunity for transfer and development of technology, enhancement of know-how and managerial

and reservoir engineering skills is provided. The second party to the contract is obliged to submit

plans for transfer and development of technology as a part of its annual operation financial plan. In

every contract, the executive policies and operation measures for fulfillment of the provisions of this

Article shall be annex to the contract as the technology annex.

Note: The second party to the contract is obliged to fulfill the main contract’s provisions related to

transfer and development of technology in its contracts with subcontractors.

B) The other party to the contract is obliged to maximise the utilisation of the technical,

engineering, manufacturing, industrial and operational capabilities of the country in accordance with

the Law of Maximum Utilisation of Manufacturing and Services Capabilities in fulfillment of the

country’s needs and strengthening export and modifications to Article 104 of Direct Taxes Law –

ratified in 2011 – and its guidelines.

C) The other party to the contract is obliged to maximise the utilisation of local human resources

in execution of the contract and submit comprehensive training plans aiming at improving the

quality of human resources and making required investment in the context of capital expenditure for

execution of research and education programmes, such as upgrading existing research centres and

establishing joint research centres or executing joint research project. Such plans shall be relevant to

the project operation (exploration, appraisal, initial development, future development including

production and improved oil recovery (IOR/IGT and EOR/EGR)) and shall be made in agreement

with NIOC in every stages of the reservoir’s lifespan and in accordance with each project’s specific

timetable.

In the development company subject of Note A of Article 11, the managerial positions, as per terms

agreed upon in this contract, are rotating. In the management organisation of such company, the

executive management positions shall be gradually transferred to the Iranian nationals in order to

facilitate the process of know-how and managerial skills transfers to the Iranian party.

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Article 5: The contracts subject of this Resolution shall be concluded in incompliance with the laws

and regulations governing the transactions of NIOC and following acquiring required licences from

competent legal authorities on per cases between NIOC and the second party to the contract.

Article 6: The conditions for execution of the contracts subject of this approval are as per below:

A) In order to execute exploration operation in a contractual area and the subsequent development

operation (first category of contracts), NIOC shall determine its minimum exploration commitments

and shall invite credible and competent companies to submit their proposal in accordance with the

relevant laws and regulations. With regards to the development operation of a field or a discovered

reserve or operations relating to the enhanced or improved oil recovery of an existing field (second

and third categories of the contracts), NIOC shall present a preliminary structure for the

development by conducting a reservoir engineering study and shall invite credible and competent

companies to submit their proposal. Such plans for both categories of contracts are considered as

guidelines for the proposing companies and shall not prevent receipt and examination of proposals

by new companies.

Note 1: The development operation of a field or a reservoir and operations relating to the enhanced

and improved oil recovery operations (IOR/IGR/EOR/EGR) shall be conducted in phase-by-phase

basis in accordance with the structure of the development plan and for any new phase in accordance

with the behaviour of the reservoir in the previous phase.

Note B: The assessment of the technical and financial capabilities of the domestic and foreign

companies is by NIOC.

B) The project Fee is based on one of foreign currencies accepted by the Central Bank of Islamic

Republic of Iran and is determined by the Ministry of Petroleum based on per additional barrel of oil

for the oil fields or oil reserves and per thousand standard cubic foot gas or per additional barrel of

condensate for gas fields or gas reserves. These fees are determined in accordance with Note E of

Article 3 in order to create inventive to utilise efficient exploration, development, production and

exploitation methods as per the conditions of each project and fluctuate depending on factors such as

the level of production capacity of each field or reservoir and also consideration to the risk index of

exploration areas and are also determined in cash or in kind in accordance with the market prices of

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gas and shall be paid according to the prices from the date of start of initial production to the end of

the duration of the contract. The Fee is one of the main factors for determining the tender winner in

accordance with the relevant rules and regulations.

C) The Fee for production of per barrel of oil from oil fields or oil reserves or production of per

thousands standard cubic feet gas and per barrel condensate from gas fields or reserves and the

repayment of direct costs, indirect costs, operation costs together with costs of finance in accordance

with the terms of the contract for execution of the project is paid from maximum 50 percent of

additional crude or condensate production and up to 75 percent of the additional gas production and

other products or their revenues based on market prices from the date of initial production. The

termination of the contract does not refrain the repayment of remaining costs as per the terms of the

contract.

Note: If a portion of production from the fields subject of the contract which are allocated for the

repayment obligations and remunerations to other party of the contract, are required for domestic

consumption as per the Oil Minister’s decision, NIOC is authorised to proceed for a swap.

D) For the second party to the contract, without the approval of NIOC, neither party to the

contract is permitted to transfer whole or part of its share/shares (the transfer of rights and

obligations) under the contract to others.

Article 7: Under the contracts subject of this approval, the Ministry of Petroleum is permitted to

stipulate the duration of the contracts proportionate to the duration required for execution of the

project up to maximum 20 years from the start date of the development operations. The

aforementioned period, in case of execution of enhanced oil recovery project or improved oil

recovery (IOR/IGR/EOR/EGR), the contract period is extendable for 5 year depending on the

individual project’s operational and economic requirements. With regards to the integrated

exploration, development and operation projects, the exploration period, as the case may be, will be

added to the contract’s aforementioned period.

Article 8 - The guidelines of expenditure for achieving contractual objectives are as follows:

A) The costs of descriptive or exploratory operations by applying the Minimum Descriptive or

Exploratory Commitment Principle are determined in the process of choosing the second party to

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the contract.

B) The costs and scope of work (SOW) for descriptive or exploratory operations, development

and exploitation is determined for the realisation of the ultimate goals of the project based on annual

financial-operational plan approved and in accordance with the conditions and the behaviour of the

reservoir upon the agreement made between the contracting parties.

C) In each contract, the second party performs its operation within the framework of the

processes annexed to the contract.

D) In each contract, a joint committee is formed for managing the contract, undertaking all the

projects’ operations and making decisions with regards to the financial, technical and legal aspects

within the framework of operation, subcontracting and executing annual financial-operational

projects. The responsibility of conducting operations within the framework of approved operational-

financial projects is upon the second party to the contract. The committee is composed of equal

number of representative from the contracting parties having equal rights to vote. The decisions are

made unanimously by the committee and are confirmed by the competent authorities from NIOC.

E) The whole executive operation is conducted within the framework of the project’s overall

estimations as well as the approved annual financial-operational plan while all the risks and

responsibilities are taken by the committee. Upon the approval of the joint managing committee and

confirmation of the employer/client, the executive operation is delegated to the competent

companies within the framework of operational processes annexed to the contract as the case may

be. No fixed cost is set in this type of contract due to their nature, rather they include Open Capex

and the initial figures are of predictive and estimative nature. The real confirmed costs are taken into

accounts based on annual financial-operational plans being approved according to field’s behavior

and market condition.

F) All the measures set forth in the contract (excluding the management of the entire contract and

conducting reservoir engineering studies) are delegated to competent manufacturers and contractors.

These subcontractors are selected by the main contractor according to instruction annexed to the

contract which is then confirmed by the employer/client in accordance with paragraph (d) of this

Article.

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Note: Reservoir engineering studies and their respective costs are admitted by the second party in

the order agreed upon in the contract and are taken into accounts as direct costs.

Article 9: The sum total of direct costs, indirect costs, and relevant finance costs, based on the

contract (as the case may be), and exploitation costs including; exploratory and developmental

operations as well as the plans for improving or boosting recovery factor shall be timely paid by the

contractor.

Article 10: The repayment structure is as follows:

A) The repayment of direct capital costs, indirect costs and contract financing costs (as the case

may be), for the period specified in the contract are calculated and arranged to be paid in

instalments.

B) Direct and indirect costs of the exploitation from the outset of initial production is calculated

and repaid at market prices. Also payment of the contractor’s remuneration is initiated at the same

time based on the terms of the contract.

C) All the payments set forth in Paragraphs (A) and (B) of this article are made to the contractor

at market price or in cash from the resources subject to Paragraph (C) of Article 6 i.e. products or

proceeds of the productions of the reservoir or field subject to the contract.

Article 11: The instruction for the exploitation of the plans cited in the contracts subject to this

Resolution is as follows:

A) With regards to the development plan of the located fields or achievement of additional

production resulted from the contractor’s operation in IOR/IGR and EOR/EGR plans, production

and exploitation of the facilities is conducted by the Iranian company (whose professional

qualifications are endorsed by the employer/client) from the beginning, in keeping with the

liabilities of second party as set in the contract.

Note: With regards to under performance on operation/production from the fields or reservoirs, if the

first party recognise that the participation of its subsidiaries is necessary during the exploitation

phase, provided that the issue is confirmed by the Ministry of Petroleum, a joint operation

agreement is signed between the second party and the subsidiary of NIOC. This operation is jointly

conducted in keeping with the commitments for full technical, legal and professional support and

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supervision of the second party along with supplying the required equipment and materials. In

exploiting the facilities subject to the contract, the respective subsidiary company is obliged to

observe and fulfill all the technical and professional guidelines and operational plans of the second

party as approved by NIOC.

B) Oil, gas and condensate and all the other products discovered in the reservoir subject to the

contract wholly belong to the Islamic Republic of Iran; the oil, gas or condensate and all the

byproducts of the production wholly belong to the employer/client.

C) Should the need to fundamental repair of equipment or workover or any operation related to

maintenance of facilities and equipment arises, they are conducted under the permission of the

employer/client and shall be financed by the second party to the contract which along with the

financing costs are later repaid from the revenues of the additional oil produced from the field or

reservoir, to the extent agreed in the contract.

Article 12: NIOC is authorised to sign buyback contracts for the development of located and

undeveloped field or reservoir, if necessary, after obtaining case permission from the Ministry of

Petroleum, in compliance with Article 1 (excluding Paragraph (R) of this Article), Article 3

(excluding Paragraph (E)), Note under Paragraph (A), Paragraphs (B) and (E) of Article 4, Article 5,

Note under Paragraph (B) of Article 6, Articles 8, 9 and 10 of this Resolution. In these contracts,

NIOC is allowed to repay the direct and indirect costs as well as the costs of finance and the

remuneration of the second party in compliance with Paragraph (C) of Article 6 of the same

Resolution applying the routine method of similar contracts in accordance with the timetable agreed

in the contract.

Article 13: In drafting each contract and its annexes, in addition to the provisions explicitly

stipulated in this Resolution, all the rights, obligations and responsibilities of all parties to the

contract in different fields, such as accounting, audit, payment methods or financial repayment,

technical inspection, repair and maintenance, production calculation methods, human resource

training, health, safety and environment, import and export, insurance, confidentiality, terms of

contract termination, force majeure, decommissioning, dispute settlement method and the language

of the contract shall be clearly defined and stipulated in such draft contract.

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Article 14: Contracts subject of this Resolution’s provisions are those in which the responsibility for

a field’s operation during production and consequently the repayment of the costs of the second

party and payment of remunerations and wages to the second party to the contract depend on the

success of the second party in production of oil and gas. Therefore, the contracts that depending of

the requirements or necessity will be concluded by NIOC with Oil Services Companies (OSC)(such

as drilling companies) or the EPC/E&C companies and other suppliers of goods and services

(including whether the payments to them are made in cash or are together with finance, such as EPC

contracts), shall follow the relevant regulations and are not subject to the provisions of this

Resolution.

B) 3rdResolution: Details of 6 new amendments to new IPC models

The six new amendments to IPC model were approved at the Cabinet Ministers in September 2016,

encompassing changes to the oil and gas reserves ownership laws and determination of executive

constraints of IPC models. The new amendments were then sent to the Conformity Assessment

Committee of the Parliament and won the vote of approval of the parliamentarians.

These amendments could be summarised as follow:

1. In Paragraph (V) of Article (1), the term “structure” should be added after the term “duty”.

2. The following text should be added as a note to Article (2):

Note: Oil contracts subject of this Resolution are executable in the following cases:

A: Joint reservoirs development contracts

B. Exploration, development and operation contracts for unexplored fields and reservoirs

C: Operation contracts for reservoirs with under 20% recovery factor

D: Oil and gas fields in Caspian Sea, Oman Sea, and northern & eastern areas of Iran

3. The following text shall be added as Note (3) to Paragraph (A) of Article (4):

Note 3: In order to support Iranian Exploration and Production (E&P) companies, the government

shall give them priority in providing financial facilities from banks.

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4: Article (7) is modified as follows:

Article 7: Under the contracts subject of this Resolution, the Petroleum Ministry is authorised to

consider the terms of the contract in proportion to the time required for implementing the

development plans with a maximum of twenty years from the date of commencing development

operation. Regarding the consecutive exploration, development and operation plans, the duration of

exploration is added to the mentioned period as the case may be.

5. Paragraph (D) of Article (11) is modified as follows:

D) Oil, gas, condensate and other materials available in reservoirs subject of the contract are totally

in the ownership of Islamic Republic of Iran. Also, exercising the ownership rights regarding the oil,

gas and condensate along with any byproducts is upon the employer.

6. Article (15) is modified as follows:

Article (15): Contracts by which the responsibility of reservoir performance during operation period,

and subsequently repayment of the other party’s expenditures and emolument payment as well as

remuneration payment to the second party which depends on his achievements in oil and gas

production compared to buyback contracts, are subject of these amendments; therefore, contracts set

forth by NIOC in accordance with the operational requirements for exploration, production freeze

and other oil operations resulting in development of fields and reservoirs or boosting recovery from

reservoirs with oil service companies (OSC) (like drilling companies) or EPC and E&C contractors

and other suppliers of goods and services (whether their payments are in cash or includes finance

such as engineering, procurement, construction and finance contracts (EPCF)) are under the relevant

laws and are not subject to this resolution.

Energy Pioneers Ltd is a leading Iran energy-focused strategic consulting company, providing a wide range of investment advisory services in support of the development of Iran’s energy sector.

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Iranian Petroleum Contract - Squarespace · Iranian Petroleum Contract ... Iran Oil and Gas Monitor...

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