First VP Embraces MP’s Criticism of Oil Contracts, Calls for Amendments

Here’s IFP’s translation of a report by Alef news website:

 

After Tavakkoli, a member of the previous Iranian Parliament, published a letter he had written to Jahangiri to urge him to modify new oil contracts, the Iranian First VP commended the letter, and ordered Zanganeh to prepare proposals for amendments to be approved in the Cabinet.

Tavakkoli, who is also the chairman of the Transparency and Justice Watch NGO, noted in his letter that the new model of oil contracts is against national interests and the Establishment’s strategic interests.

He called for a major reform in the government’s strategy for attracting foreign investment and technology in the oil and gas industry.

In response to the criticism, on Tuesday May 31 Jahangiri wrote the following letter to Zanganeh and urged him to offer appropriate corrections to the Cabinet:

“The letter written on May 21 by Dr. Tavakkoli, entitled ‘A report on the discussions between a group of critics and the Oil Ministry officials: Why the government should strategically change its approach in attracting foreign investment?’ was read by First VP Eshaq Jahangiri. He wrote as a footnote:

Dear Mr. Zanganeh, Minister of Oil, and Mr. Mohammadi, member of the Expediency Council,

Thank you for your efforts to take critical views into account: please present the government with your proposals for amendments for adoption [by the government] as soon as possible.

I appreciate the critics who have tried to make the framework of contracts more complete, and declared their opinions in person or through letters, or by publishing them in the media.”

(Jahangiri’s letter to Zangeneh, as published on the government website)

 

In his critical letter, Tavakkoli had asserted that the new oil and gas contracts are in violation of Iran’s regulations, breach the country’s national sovereignty, contradict the principles of Resistance Economy, collapse the National Iran Oil Company [NIOC], promote the sale of crude oil [the Leader has repeatedly discouraged the sale of raw materials, and called for them to be refined before being sold], provide enormous interest rates for foreign companies, and bestow oilfields across the country to foreign companies at least for 7 years of excavation and 25 years of development and operation. He thus concluded that the IPC [Iran Petroleum Contract] is against the country’s national interests.

It is worth mentioning that earlier this year, Zanganeh called Tavakkoli a “sympathetic critic”.

According to a report by Press TV,IPC is replacing buyback deals. Under a buyback deal, the host government agrees to pay the contractor an agreed price for all volumes of hydrocarbons the contractor produces.

Under the IPC, however, the NIOC will set up joint ventures for crude oil and gas production with international companies, who will be paid with a share of the output.

Under the IPC, different stages of exploration, development and production will be offered to contractors as an integrated package, with the emphasis laid on enhanced and improved recovery.

The architects of the new contract say foreign companies can no longer rush out of their contractual obligations if sanctions are ever re-imposed on Iran. Critics, however, cite numerous shortcomings which seriously hinder the new formulation.