Iran signs $2.2 billion oil contract, with new model
Iran secured a contract with Persia Oil & Gas Industry Development Co. to increase oil production at three oil fields along Iran’s border with Iraq, according to media reports. The $2.2 billion contract was based on Iran’s overhauled framework, a contract that offers oil companies more incentives to boost production.
Under the IPC, Iran will establish joint ventures with oil companies — international and domestic — to jointly explore and develop fields. Persia Oil and Gas was one of eight firms approved by Tehran to work as local partners for international companies under the IPC. It is loosely affiliated with Setad Ejraiye Farmane Hazrate Emam (or Setad), a giant business organization directly under Supreme Leader Ayatollah Ali Khamenei that oversees roughly $100 billion in assets.
By awarding the first contracts under the new model to a company linked to Setad, the National Iranian Oil Co. and Oil Minister Bijan Zanganeh likely hoped to silence criticism and questions over the contract model and whether it is in Iran’s best interest.
The IPC is primarily designed to draw Western companies, along with their money and technology, to develop the fields that are too old or challenging for Iran to develop itself.