Iran unveils first oil project under new model

Iran plans a $2.2 billion development of a field shared with Iraq to produce 50,000 barrels of oil per day, an official says, marking the first introduction of major energy projects under a new contract.

The Changuleh oilfield, part of the Anaran onshore block, will be developed in two phases to produce 15,000 bpd in the initial stage before raising output to 50,000 bpd, the executor of the project Ali Abbasi Laraki told the Shana news agency Friday.

The field will be introduced when Iran unveils new oil and gas contracts at a London conference planned for December, he added.

Three-dimensional seismic and infrastructural operations have been completed, pending the investor to be named to start development, Laraki said.

The field is linked to Iran's Azar field which the country shares with Iraq's Badra.

Energy officials say Iran has identified nearly 50 oil and gas projects worth $185 billion for development.

New contracts will be signed under the Iran Petroleum Contract (IPC) model which is more attractive to foreign investors, Minister of Petroleum Bijan Zangeneh has said.

Under the new formula, Iran will cede exploration, development and production operations on an oilfield exclusively to a foreign contractor. Foreign companies will be required to commit to optimal and sustainable production from the field and transfer of technology.

Mehdi Hosseini, head of Iranian Ministry of Petroleum's Oil Contracts Revision Committee, said the country will adopt "risk service contract" models.

They will offer investors payback in the form of cash or oil allocation but they won't be allowed to claim ownership of the country's energy reserves, Bloomberg quoted him as saying.

"They would resemble production sharing but with different characteristics," Hosseini said.

"The international oil company, or the investing company, would be accepting certain risks in view of which it would be entitled to a portion of the oil thus produced. Or the reward of that risk is a share/portion of the oil."

Hosseini said Iran's production costs are $8 to $10 a barrel; hence, the country's projects will be attractive to investors.

Iran, he said, hopes to boost crude production to 5.7 million barrels a day.