Iran oil contracts not yet ready for investment- International group

Iran's cabinet on Wednesday approved a draft for the country's new oil and gas contracts. (SHUTTERSTOCK)

Iran's oil contracts are not yet fit for Austrian energy group OMV to invest in planned projects in the country, which hopes foreign investment will revamp its ageing oil infrastructure, OMV's chief executive told Reuters on Wednesday.

In May, four months after most international sanctions against Iran were lifted after it agreed to shrink its nuclear programme, OMV signed a memorandum of understanding with the National Iranian Oil Company for several projects there.

OMV Chief Executive Rainer Seele said in an interview that talks to fine-tune a model contract for international oil companies have not been successful yet.

"This process is still ongoing; this is taking quite a long time... We have not yet defined a clean framework for the projects that are interesting for us," Seele said when asked how long this might take.

"We can make an investment decision only when we really know what the framework and the conditions are."

OMV's envisaged projects are in the Zagros area in western Iran, including the Cheshmeh Khosh and Band-E-Karkheh fields where OMV had started operations in 2001, and the Fars field in the south.

Iran's cabinet on Wednesday approved a draft for the country's new oil and gas contracts that includes 150 changes to a previous model contract, state broadcaster IRIB said.

Another hurdle for OMV to start injecting fresh money into Iran, which needs $200 billion to return to pre-sanctions output levels, is an outstanding debt Iran owes OMV to reimburse it for past appraisal and exploration activities.

"If you owe me money and you're not giving it back to me and then want to proceed with me in the future, would you think that's a good combination?" Seele said of the debt linked to OMV's activities before international sanctions were imposed on Iran in 2006. "We are in intensive talks (about this) that have not yet achieved their objective."

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Last Update: 15:00 KSA 18:00 - GMT 15:00
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