Iranian oil Minister Bijan Zanganeh has said the contracts in oil and gas sector will be revised in order to increase the recovery rate of the country's active fields.
It was previously announced that Iran plans to adjust country's oil contracts in order to "make the contracts more attractive to foreign companies".
Iran has had experiences in buy-back and ordinary contracts with foreigners, however non of them motivated the contractors to have a firm responsibility and interest in recovery rate of a field.
Iranian Oil Minister's statement came simultaneous with Indian Business Standard daily news paper's report on Sep.10 which quoted officials who said that Tehran has asked India to sign a production sharing contract (PSA) for Farsi gas block (offshore Farzad B) in a span of three months.
According to Indian news paper, Iran is bargaining with India to sign production sharing agreement if it want to pay off 100 percent of the price of Iranian oil import through rupees.
Due to sanctions, India has to make payments for Iranian oil imports through rupees - a currency which is facing increasing devaluation.
The U.S. sanctions over Iran allow Iranian oil customers to only make payments in their own currencies and deposit that in a local bank, while Iran is banned to transfer the paid money abroad in any currency. Tehran can only spend the deposited money to purchase the permitted goods and import them.
Production sharing agreements can be the most interesting kind of contract for foreign investors who wish to do business in Iran.
Under the agreement, the investor company and the government will share the resources extracted from the project. Iran is very careful about the ownership of its oil and gas fields but it has announced that it will study this kind of contract for joint fields as well.
ONGC Videsh Ltd (OVL), Indian Oil Corp. Ltd (IOC) and Oil India Ltd (OIL) had won the Farsi gas block (offshore Farzad B) in 2002 from National Iranian Oil Company.
While OVL and IOC have 40 percent each, OIL holds 20 percent stake in the block, however, after over a decade-longed delay, Iran cancelled the agreement.
Iran is seven-year behind his partner Saudi Arabia in developing the joint field, while it is estimated that the developing this field needs about $5 billion of investment.
Farzad B field is estimated to hold 21.68 trillion cubic feet reserves which of 12.8 tcf (above 362 bcm) is recoverable.
The U.S. can impose sanctions on any company investing more than $20 million in Iran's oil & gas sector, while OIL and IOC jointly acquired a 30 percent stake in Carrizo Oil and Gas Inc.'s shale assets in the Denver-Julesburg Basin in Colorado last year and have huge interests in the United States.
In case India agrees to sign Farzad B-related development contracts, it would be Iran's first PSA contract in oil and gas sphere.
On the other hand, regarding this fact that Iran's exports to India is about four times more than imports from this country, while there are obstacles in getting export incomes from India, Tehran can enjoy its first PSA.
Dalga Khatinoglu /Trend/