Page 5 - MEOG Week 14 2021

MEOG COMMENTARY MEOG

petroleum contract (IPC) in late 2015 to replace He noted that there were various stipulations
the unpopular buyback contract model. under consideration for allowing companies to
The IPC provided a far higher degree of prof- work in the energy sector, but the most impor-
it-sharing once production commences, greater tant of these will be partnership with a local
flexibility in cost recovery for IOCs, and up to firm. This came as little surprise given that Iran
25-year partnership durations. has long implemented an approach of knowl-
Most important was the option for interna- edge-transfer on all projects involving interna-
tional partners to establish a joint venture (JV) tional operators or contractors.
agreement with the National Iranian Oil Co. However, as the Ministry of Petroleum has
(NIOC) or one of its subsidiaries, though the sought to make up for the IOCs’ lost ground, a
IOC would have no right of reserve ownership. further challenge has been presented. Iran has
The contract model formed a major part of been able to expand capacity at many of its oil-
Tehran’s effort to make the country’s oil sector fields by contracting local firms for field mainte-
more business-friendly for IOCs and will be nance and expansion, some of which have direct
the basis for future engagements. However, the or indirect relationships with the Islamic Revo-
first IPC was not signed until October 2016 with lutionary Guard Corps (IRGC).
domestic firm Persia Oil & Gas Industry Devel- Khatam-al Anbiya Construction Headquar-
opment Co. (POGIDC) for the Yaran, Marun ters (KAA), the engineering arm of the hard-line
and Kupal oilfields. IRGC, was awarded a contract in early January
Total was the first IOC to sign on, agreeing covering the second, third and fifth phases of the
terms in July 2017 for phase 11 of the supergiant 63bn barrel Ahvaz oilfield as well as the offshore
South Pars non-associated gas field (SP11), Reshadat deposit.
withdrawing from the deal just over a year later Meanwhile, Mashin Sazi Arak, in which KAA
following the withdrawal of the US from the is known to hold shares, was awarded a deal for
JCPOA. the Bibi Hakimeh oilfield, which has around
South Pars was one of around 40 fields across 500mn barrels of oil remaining.
the Iranian on- and offshore that were offered to While the group holds interests in various
IOCs in 2016, and while many of these attracted assets such as the supergiant South Pars gas field
the attention of household names from around and Marun oilfield through its reported 812 affil-
the world, these efforts came to nought as the US iates and subsidiaries, including the high-profile
ratcheted up the threats against Tehran. MAPNA Group, Oil Industries Engineering
Many of these companies will be hoping and Construction (OIEC), Iran Marine Indus-
that they can pick up where they left off, but the trial Co. (SADRA), Persia Oil and Gas Industry
landscape has changed in Iran and the opportu- Development Co. (POGIDC), Tadbir Energy
nities may no longer be available, with domestic Development Co. and Mashin Sazi, this week’s
companies having filled in where IOCs were contract award appears to be the first directly
expected to develop fields. awarded to KAAC for several years.
With Chinese companies set to benefit from
Localisation Bejing’s deal to pick up where they left off at
In January Iran’s Minister of Petroleum Bijan South Pars, South Azadegan among others,
Zanganeh said that foreign companies would without a major policy shift, it appears that the
need to partner with Iranian companies in order options may be limited by the time Western
to be win work in Iran’s oil industry. IOCs get their turn.™

Week 14 07•April•2021 www. NEWSBASE .com P5