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Iranian parliament has passed a law demanding Oil Ministry to increase the oil and gas recovery rate.
The enhanced oil recovery (EOR) is vital for Iran. because its in-situ oil reserves stand at 712 billion barrels with natural recovery rate below 15 percent. Even after gas and water re-injection. the recovery rate roughly reaches 25 percent.
The law demands Oil Ministry to use all tools and private companies’ capacities to invest in EOR projects. especially in joint fields.
One of the blocks with low recovery rate is West Karoon. containing 56 billion barrels of in-situ oil. West Karoon includes five major fields. all of which are jointly owned with Iraq and have a recovery rate below 10 percent in average.
Iran plans to ask foreign contractors to at least double this figure.
The law asks the government to refrain from assigning property rights on fields to companies.
Iran plans to issue tenders to develop 49 oil and gas projects. including West Karoon projects. based on newly designed contract model. called Iran Petroleum Contracts. or IPC.
IPC allows foreign companies to own a percentage of production volume. a term that encourages the contractors to enhance recovery rate to take more oil and gas.
An advisor in Iran’s Oil Ministry has told Trend that IPC doesn’t allow foreign or local companies to own the content of a reservoir. but they take a percentage of production volume in certain places. such as oil terminals.
The official anonymously said the new law is not in contrast with IPC terms.
Coming to the legal aspects of tenders and projects. the source said each project has its own individuality and terms differ from one to another.
In one project. the investment term may be restricted to a period. but in another one it can continue until the end of production period. The production phases. capital and operational expenditures. re-payments. profits. etc. depend on the terms of each tender. the advisor said. adding the generalities of the legal aspects of IPC are clear in total.
Iran is banned to use USD in bank transactions. according to US sanctions. but the official said the deals would be signed based on USD and all of financial calculations would be based on USD. but in bank transactions the sides can change the values to other foreign currencies.
Iran plans to invest $100 billion in upstream oil and gas projects by 2021. of which 80 percent is expected to be attracted from abroad.
