IRGC, EIKO rival for foreigners in Iran’s energy projects

As Iran is planning to attract $100 billion worth of investment by 2021 to develop its oil and gas fields, it seems that foreigners would face a challenge in Iran: competing with Iran's Revolutionary Guard Corps (IRGC) and The Execution of Imam Khomeini's Order aka (EIKO).
IRGC is still blacklisted by the US, but the nuclear agreement, commenced in January 2016, lifted sanctions against the EIKO, a vast holding company controlled by the supreme leader with assets and commercial operations worth an estimated $95 billion.
Therefore, foreign companies would be cautious to cooperate, while the pressure on Iranian government for signing mega contracts with IRGC and EIKO continues.
Earlier, Iran’s oil ministry and French Total signed a confidentiality agreement for studying giant South Azadegan oil field. Iran’s Oil ministry said that the mentioned agreement doesn’t mean that Iran commits to give away the development of this field to Total.
However Fars News Agency, close to IRGC, reported on Sep.10 that Khatam al-Anbia Headquarters (belongs to IRGC) as well as Tadbir Energy Company (belongs to EIKO) have proposed a development plan of South Azadegan to the ministry.
“The value of their proposal is under the Total’s proposed value,” the report said.
The report didn’t elaborate any exact value, but said that “one of them has a 15 billion-euro proposal for the oil ministry’s oil and gas projects”.
On the other hand, another news agency Tasnim, which is close to IRGC, criticized the government’s order for oil ministry to recognize articles of 14 and 15 of the United Nations Security Council Resolution 2231 as well as article 37 of the nuclear agreement (Joint Comprehensive Plan of Action, or JCPOA) in Iran’s new designed oil contracts, called Iran Petroleum Contracts (IPC).
According to the mentioned articles, in case if the nuclear agreement is cancelled and sanctions which were eliminated in January 2016 are revived, the foreign companies which started dealing with Iran during the post sanctions era will not be sanctioned, unless they are involved in deals with companies which are still blacklisted.
Iran’s government introduced IPC last December which proposes 49 oil and gas projects for foreigners, but couldn’t sign any agreement as of now due to opposition from Iranian hardline politicians. Since then, the Iranian government has had to amend the 150 terms of IPC, but the opposition still continues.
The offered 21 gas and 29 oil fields based on IPC:
Gas in place
Trillion cubic feet
Current output
Mcf/d
Total estimated output
Mcf/d
Estimated condensate output
b/d
226.42
1,023
14,416
110,610
Oil in place
billion stock tank barrels
Current output
b/d
Total estimated output
b/d
Associated gas output mcf/d
214
217,000
To be proposed by contractor
7,000
Despite serious criticism from the hardliners, Iran’s government plans to issue the first tender on oil and gas projects based on IPC in October.
Iran expects to attract $10 billion by March 2017 by sealing three contracts based on IPC, Ali Kardor, the managing director of the National Iranian Oil Company (NIOC) said Aug 30.
IPC allows foreign companies to sign long-term contracts with Iran (20-25 years) and receive a percentage of produced oil as long as the field is active.
Foreign companies are reluctant to the terms of old contracts (Buy-back) that Iran had offered for the last several decades.
A foreign company also has to choose an Iranian partner, and the leadership of the project would change between them. It would help Iranian companies to get familiar with project development aspects and technologies.
However, it seems that Iranian hardliners have decided to prevent the implementation of IPC, arguing that it is against national interests.
It seems the rivals are determined to defeat moderate President Hassan Rouhani in the next presidential elections, scheduled for 2017, with all possible leverages to thwart his economic programs including flourishing the country’s energy sector.

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