New Model of Oil Contracts Marks an Opportunity for Iranian Economy

A declaration announced to that effect by the Committee in Charge of Overseeing Concordance of Government Approvals with Parliament Laws should be taken as an end to months of argument and investigation by kind critics and experts and as a start to solidarity and cooperation to protection national and public interests.

The Committee has announced that the new model of oil contracts is not in contradiction with the upstream laws.

There are still certain individuals, who are not still aware of the ongoing conditions and beat drums of protests irrespective of the economic and industrial exigencies.

The wise thinkers, however, consider enforcement of the contracts as a vital opportunity for economy of the state.

They believe the contracts will serve as an initial step towards exploitation of the oil and gas resources, which are the biggest wealth and capital of the country. So, any delay in their exploitation will deal irreparable damage on the country.

The new model of oil contracts are based on several main pillars that are drafted using knowledge of the law and practical experience of enforcing the buy-back contracts.

The model safeguards national sovereignty over the oil and gas fields and reservoirs, while paying attention to the latest technology and capacity to address the oil industry needs.

At the same time, the new model of oil contracts pay special attention to extension of capacity and making Iranian companies more powerful in the technology and managerial domains.

Maximum use of domestic potential, protective production, respect for environmental issues and social responsibility are among other safe features of the new model of oil contracts.

The Islamic Republic of Iran enjoys the world’s highest hydrocarbon reserves for containing more than 830 billion barrels of in-situ liquid hydrocarbon reserves, nearly 240 billion barrels of which can be extracted. But the point is that only 163 out of 360 oil and gas reserves are developed and 55 percent remain undeveloped yet.

Meanwhile, today, most oil rich states have concentrated major portion of their time and energy on upgrading methods of raising recovery. This should also be a top priority for us for enjoying highest volume of the world’s hydrocarbon reserves. Regarding the average recovery in Iran, which is about 10 percent less than the world average, investment in and exploitation of the latest technology will be undeniable necessary for Iranian oil industry. One percent increase in recovery will result in more than seven billion barrels extra oil for us.

Meanwhile, taking joint fields into consideration, it will then become more clear that we should expedite implementation of the new model of contracts in a well calculated manner.

During years of sanction, serious and fruitful efforts were made to indigenize oil industry and bring about self-sufficiency, bearing fruitful results. However, it is an undeniable fact that the latest technology is a far access goal. Making up the backwardness will not be so possible unless through engagement and relation with the world. Today, cooperation with foreign well-credited companies, that enjoy latest technology and capital, will not be synonymous with dependence. We should find a way for transfer of technology and its indigenization and upgrade domestic potential.

It is expected that with Parliament seal of approval laid on the contracts and through cooperation of all kind colleagues and oil industry officials, the industry will continue to proceed in the path to economic flourishment, making future of Islamic Iran more honorable and enlightened.

By: Akbar Nematollahi
Translated by: Behnaz H. Gholipour