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Iran drawing up new contracts to attract oil majors

Iran's oil ministry said Sunday it is preparing a new type of contract that would be more attractive to major oil companies in case of the lifting of international sanctions.

TEHRAN: Iran's oil ministry said Sunday it is preparing a new type of contract that would be more attractive to major oil companies in case of the lifting of international sanctions.

International oil and gas companies have withdrawn from Iran since the strengthening of US and European sanctions in recent years over Tehran's controversial nuclear drive.

These sanctions have drastically reduced oil exports from Iran, also lowering production to less than 3 million barrels per day.

But a landmark nuclear agreement reached in November between Iran and the P5+1 group of world powers has raised hopes in Tehran that the energy sector could be revived by the return of oil majors.

A committee formed at the oil ministry to iron out the new type of contracts is expected to finish its work by May or June, ministry official Mehdi Hosseini who heads the team, told reporters.

The new contracts would replace buyback types under which contractors funded projects and got paid in the form of an allocated production share -- a system applied for more than 20 years in Iran.

"The reality is that these contracts were one-sided and only beneficial to Iran. Foreign companies were complaining," Hosseini said.

Without giving out details, he said the new contract would be "very close to what is practiced at international level to provide maximum flexibility in all areas, including operation, cooperation and bureaucracy."

Once ready, the new contract would be presented to international companies at a major conference expected to be held in London in November, he said.

According to Hosseini, Iran "will need $150 billion over the next five years for exploration and production operations."

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