(Recasts, adds details; Changes dateline to Washington)
By Yeganeh Torbati
WASHINGTON Oct 4 Iran signed the first oil
output contract under a new, less restrictive model on Tuesday,
Iranian oil officials were quoted as saying, with a firm
identified by the United States as part of a conglomerate
controlled by Iran's Supreme Leader.
Iran hopes its new Iran Petroleum Contracts (IPC), part of
an effort to sweeten the terms it offers on oil development
deals, will attract foreign investors and boost production after
years of sanctions.
The National Iranian Oil Company signed the contract with
Persia Oil & Gas Industry Development Co., an Iranian firm,
according to the oil ministry's official website SHANA. (bit.ly/2dGKi8h)
The U.S. Treasury Department named Persia Oil & Gas in 2013
as part of Setad Ejraiye Farman-e Emam, or Setad, a secretive
and powerful organization overseen by Iranian Supreme Leader Ali
With stakes in nearly every sector of Iran's economy, Setad
built its empire on the seizure of thousands of properties
belonging to religious minorities, business people and Iranians
living abroad, according to a 2013 Reuters investigation, which
estimated the network's holdings at about $95 billion. (reut.rs/1g1qkCg)
The U.S. Treasury in 2013 sanctioned Setad and 37 companies
it said it oversees, calling it "a major network of front
companies controlled by Iran's leadership." Those sanctions were
lifted in January, as part of the historic nuclear deal reached
between Iran and world powers in 2015.
Under the contract signed on Tuesday, Persia Oil & Gas will
develop four oil fields and reservoirs in southwest Iran,
working to increase their output from 185,000 barrels per day
now to at least 260,000 bpd, said Ali Kardor, National Iranian
Oil Company managing director, SHANA reported. He pegged the
project to be worth $2.2 billion.
"Working with Iranian firms is easier, and the contract was
signed with them more quickly," Kardor said on the sidelines of
the signing ceremony in Tehran.
Naji Sadooni, managing director of Persia Oil & Gas,
predicted one of the fields, Yaran, will produce 30,000 barrels
of oil per day within the next three weeks, according to SHANA,
calling the deal to develop the field "100 percent Iranian."
"Of course in some cases where it was needed we have used
foreign goods, but mostly Iranian manufacturers have been used
in this plan," Sadooni said.
Persia Oil & Gas did not immediately respond to a request
for comment. In response to Reuters' findings in 2013, a Setad
spokesman said at the time the information presented was "not
correct," and did not elaborate.
The new Iranian Petroleum Contract, or IPC, has been delayed
several times due to opposition from hardline rivals of Iran's
President Hassan Rouhani. It ends a buy-back system dating back
more than 20 years under which Iran did not allow foreign firms
to book reserves or take equity stakes in Iranian companies.
The new IPC has more flexible terms that take into account
oil price fluctuations and investment risks, a senior Iranian
oil official told Reuters in November.
Oil majors have said they would only go back to Iran if it
made major changes to the buy-back contracts, which companies
such as France's Total or Italy's Eni said
made them no money or even incurred losses.
Iranian media reports did not say why Persia Oil & Gas had
been singled out for the new contract. But granting the first
IPC to a firm closely linked to Khamenei could be a way around
the domestic opposition, because hardliners would be less likely
to challenge an agreement with a company associated with the
highest echelons of power.
Khamenei said in July that no new oil and gas contract for
international companies would be awarded without necessary
Iranian Oil Minister Bijan Zanganeh said Iran will sign more
IPC contracts by March but declined to give details, according
to SHANA. Iran's semi-official Tasnim news agency said NIOC will
sign the second IPC contract on Wednesday.
OPEC member Iran seeks to raise its crude output to
pre-sanction levels of 4 million bpd.
"Iran's crude oil production capacity must reach 5.2 to 5.7
million bpd in the future," Kardor said on Monday, according to
(Additional reporting by Babak Dehghanpisheh in Beirut, editing
by Michael Williams and Cynthia Osterman)