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IPC guarantees win-win situation

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On December 22, 2015, Posted by , In News, With No Comments

Western sanctions on Iran are to be lifted in the coming days which is both interesting to Iran and other countries. Given its great potentials, Iran is an ideal trade partner and a very suitable destination for foreign investors particularly those keen on oil and gas projects.

Foreign companies attach great importance to expanding cooperation with Iran in the oil sector and have focused on excellent opportunities currently offered by the country. They are currently in talks with Iranian firms to begin collaborations as soon as Western sanctions are lifted.

According to Tehran-based English newspaper, Iran Daily, the competition for the Iranian market is intensifying among foreign firms on a daily basis. In such a tight race, the winners are those companies which can prove more capable in funding the projects and transferring modern technologies.

In view of this, apparently, leading international companies, particularly European firms, have a better chance of establishing partnerships with Iranian counterparts in the post-sanctions era. This has also been confirmed by Oil Minister Bijan Namdar Zanganeh.

In an exclusive interview with Iran Daily on the sidelines of a conference in Tehran (November 28-29) to unveil the new model of the Iranian oil contracts, Pierre Fabiani, Iran representative for the French Association of Companies and Professionals in the Oil, Gas and Allied Industries, elaborated on Iran Petroleum Contracts (IPC), prospects of cooperation and the future of the energy market in Iran and the world.

Fabiani, who was Total SA’s head in Iran prior to the sanctions, also blasted former Iranian oil contracts and cooperation condition, adding the new round of collaborations between Iranian and European countries in the post-sanctions era will mark a turning point in the global energy market.
Excerpts of the interview follow:

IRAN DAILY: What factors make the prospect of cooperation with Iran so alluring in the post-sanctions era?

PIERRE FABIANI: Having huge oil and gas reserves, Iran is among the world’s most important energy hubs. Nevertheless, what makes collaboration with the country even more attractive is its new model of oil contracts. In case Iran had not revised its old contracts, foreign firms would have expressed much less enthusiasm for cooperation with the country. Due to my former position in Iran, I am very well familiar with the country’s buy-back contracts. During the period Iran used them, the greatest pity was that the country lacked the necessary capabilities in managing production in the oilfields. However, it did not have much difficulty in oil extraction or developing the fields.

Due to their structure, buy-back contracts failed to address or guarantee international firms’ value-added, which is a very important issue. Globally speaking, Iran’s decision to revise its old contracts was a very positive move.

The new contracts are basically very much similar to production sharing contracts. Of course, there are differences between them. IPC shows that Iran has returned to the global oil market with a more usual way of thinking and plan for cooperation which is quite good news. IPC has made the prospect of cooperation with Iran even more appealing than it was before the imposition of the sanctions. I personally very much appreciate Iran’s move towards using new contracts and doing away with buy-back deals.

These new contracts safeguard the interests of both Iranian and foreign firms.

Q: Given that you personally attended Tehran Forum, how do you evaluate the conference and the opportunities it provided the participants with?

A: It was quite beneficial for all parties. Currently, rules and regulations for entering the Iranian market and participating in the country’s projects are much clearer for us. They have even become more flexible. At present, Iranian and international firms, contractors and after sales companies can begin joint projects. We have returned to the normal world.

Iran’s buy-back contracts had created a lose-lose situation; whereas, IPC guarantees a win-win situation both for the Iranian and international firms and contractors.

In the conference, all Iranian oil officials unanimously stressed that Iran is very much keen on international oil firms returning to Iran because it will lead to the transfer of modern technologies to the country.

Q: What is your prediction about the future of the energy market in Iran and the world?

A:It is not easy to make such a prediction. Nevertheless, stability in oil prices in the past few years was an unusual and somehow interesting phenomenon.
Although the price of each barrel of oil usually experiences a great deal of fluctuations, they remained stable for four consecutive years standing at about $100 per barrel. Everybody thought that the condition will continue for keeps.

Nevertheless, time proved us wrong. Currently, oil prices have dramatically changed due a number of reasons including political issues.

Q: Will other sources of energy replace fossil fuels in the future?

A:I still believe that fossil fuels are the main source of energy in the world. Although other sources are also being developed, the process to make them available globally takes a long time and is very costly.

Q: What is your forecast about Iran’s future status in the energy market?

A: Regaining its share of the international oil market is the main challenge Iran will have to face in the coming days which is a very time-taking and demanding process. To achieve this, Iran will have to be very resistant and flexible at the same time. At present, Iran has a very good condition in this game. The country has rich oil and gas resources which will definitely help it win the game in the future.

Iran and the P5+1 have reached a historic deal and both show a dramatic change in their attitudes and stances.

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