Iran's new Integrated Petroleum Contracts

Analysis

Iran hosted an “Oil Show” earlier this month in Tehran. According to reports, over 600 foreign companies from 32 countries and over 1,200 Iranian companies attended the event. The foreign participants were mainly from Austria, Belgium, China, France, Russia, the United States, the UK, Japan, South Korea, Malaysia, Spain, the United Arab Emirates, Turkey, India, Germany, and Italy.

The Oil Show was the latest attempt by Iran to attract foreign investment into the country's oil and gas industry. In February 2014, the National Iranian Oil Company (NIOC) unveiled the philosophy behind its new generation of Iranian petroleum contracts. This new model form of contract will replace the third generation of “buy-back” contracts that were first used in 2009.

According to reports, the new model contract (called “Integrated Petroleum Contract”- IPC) is expected to be formally inaugurated in London by the end of 2014. The IPC has been introduced in the wake of the limited easing of sanctions on Iran under the Geneva Joint Plan of Action (JPOA) agreed by Iran and the P5+1 on 24 November 2013, which came into effect on 20 January 2014 following co-ordinated action by the EU and US.