Iran Expects $25 Billion Oil Contracts Signed Within Two Years

(Bloomberg) -- Iran expects foreign oil companies to sign deals valued at $25 billion over the next one to two years under the terms of a new contract model approved last week, the managing director of the National Iranian Oil Co. said.

The state energy producer plans to tender contracts over a period of six months to a year to develop several oil and gas fields, the oil ministry's news service Shana reported Tuesday, citing Ali Kardor. NIOC has identified 34 foreign companies as suitable bidders, he said. NIOC is also seeking investments under existing models, he said.

Iran approved the new contract model on Aug. 3 in a push to bring foreign investment and technology to rebuild its energy industry, the largest sector of the economy. The government hopes foreign companies will invest as much as $50 billion a year in Iran's oil industry. Major European oil companies such as Italy's Eni SpA and France's Total SA have expressed an interest in developing Iran's oil and gas fields.

NIOC has identified 12 to 13 fields as a priority for the first round of investment, Kardor said, without naming the fields. Oil Minister Bijan Namdar Zanganeh last week said Iran's priorities would be jointly owned oil and gas fields, and producing assets where recovery rates could be improved.

International oil companies must form a joint venture with an Iranian partner under the new contract model. The government has approved eight Iranian exploration and production firms as eligible partners, and Kardor said this number was likely to increase.

Iran has already succeeded in meeting its pledge to regain market share it lost due to the sanctions over its nuclear program. Iran boosted crude output to 3.85 million barrels a day, Fars news agency reported Wednesday, citing comments made by Zanganeh at parliament. That would be the highest since December 2008, according to data compiled by Bloomberg.

To contact the reporter on this story: Sam Wilkin in Dubai at swilkin1@bloomberg.net. To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Alaric Nightingale