Iran Oil & Gas

New Mission Towards Accommodation

of International Energy Concerns

S.M. Hosseini

London October 2015

36th Oil & Money

Conference

Iran is one of the major role players in Energy Sector:

Reserves

Production

potential

Exploration

potential

Geopolitical

position

Infrastructure Low cost- low risk

operation

Well educated experts

Political stability & safe

environment

Qualified

companies

Huge surrounding markets

Who may believe that

the world may ignore Iran’s

effective position in

accommodating

global energy needs,

Timely and Adequately

Iran is one of the major role players in Energy Sector:

Sanctions proved to be:

1. Depriving

the world of

access to

one of the

largest

global

Oil and Gas Resources

2. Unjust moves against the people not the

Governments

3. Causing dramatic suffering to the oppressed

people

4. No solution to any problem

Conclusion :

Sanctions could not last for a long period,

therefore I was always of the opinion that, the industrial world

had no option, but put an end to the sanctions sooner rather

later, as happened for the case of Iran.

Post sanctions, a new chapter of cooperation between Iran’s Oil & Gas sector and the international oil industry

1. Preparation

Restructuring the oil contract model

Definition and introduction of new E&P projects for

international participation

2. Making contract

Making contract with IOCs in a long term view for

cooperation

Details of both shall be introduced to the in line gatherings in Tehran

(Nov.21-22, 2015) and in London (Feb.24-26, 2016)

Iran

Petroleum Contract

(IPC) Short Introduction

1 Win-win situation in the contract

2 Alignment of the parties benefits

3 Sustainable approach

4 Partnership

5 Efficient operations

6 Technology transfer

7 Internationalization

Main Principals of IPC

1 Exploration

2 Integrated Exploration and Development operation for new areas.

3 Enhanced Oil Recoveries of the Brown fields (IOR&EOR)

4 Development of the Common fields with neighboring countries.

5 Exploration, Development & Production Operation in the “High Risks” areas and Deep Waters.

6 Integrated Exploration, Development, Production & IOR/EOR

7 Development of the Green fields

Flexibility of the IPC for being applied in the following areas and conditions:

Exploration

Development Production

Integrated

Operations

for:

Petroleum Operations in:

Exploration

Buy Back IPC

Tender

Development

TSA

To NIOC for Production operations

transfer of technology and management skill

less direct intervention of NIOC in operation

more financial transparency

more efficient operations

internationalization

JV for Development operations

Cooperation

Exploration Phase

Development and Production Phase EC

In case of

success

Joint Operating Company

Partnership in:

ED

International Oil Company / JV

Exploration Phase

Development Phase EC

In case of

success

ED

International Oil Company Tender

Production Phase

International Oil Company/JV

NIOC

Buy Back

IPC

ED EC

C0m of D

Cost Recovery:

Amortization: 5-7 years

IPC

Full Cost Recovery

Payment start:

from First Production

Compensation Fee $/b

Fee in:

ED Contract period

EC

Remuneration

Fee

Buy Back

ED 20-25 YEARS IPC

EC

Final

Production

First

Production

Bid Parameter

Fee Adjustment and Reward Control in:

All Cumulative amounts received by

operator as per any annual financial

report

Total Costs incurred and Paid by

Operator as per same annual financial

report

RI

Buy Back IPC

CONTRACTOR'S ECONOMIC EVALUATION

Cash Flow Table and ROR Calculation

SAMPLE PROJECT

FIGURES IN MUSD #REF!

ROR%

= 18.50%

Total -1 0 1 2 3 4 5 6 7 8 9 10

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

C a s h O u t

CAPEX Phase 100

%

3,830,000

122,560

497,900

972,820

1,103,04

0

884,730

248,950

-

-

-

-

-

-

Non CAPEX Phase 100

%

383,000

12,256

49,790

97,282

110,304

88,473

24,895

-

-

-

-

-

-

TOTAL CASH OUT

4,213,000

134,816

547,690

1,070,10

2

1,213,34

4

973,203

273,845

-

-

-

-

-

-

C a s h I n CAPEX Recovery

100

%

3,830,000

-

-

-

-

-

321,496

639,498

637,751

637,751

637,751

639,498

316,255

NON CAPEX Recovery 100

%

383,000

-

-

-

-

-

32,150

63,950

63,775

63,775

63,775

63,950

31,625

BANK CHARGES(Recovery) 100

%

2,055,676

-

-

-

-

-

172,557

343,238

342,300

342,300

342,300

343,238

169,743

REMUNERATION 100

%

3,754,105

-

-

-

-

-

315,126

626,826

625,113

625,113

625,113

626,826

309,988

TOTAL CASH IN

10,022,78

1

-

-

-

-

-

841,328

1,673,51

2

1,668,93

9

1,668,93

9

1,668,93

9

1,673,51

2

827,611

CASH FLOW or NPV(0%)

5,809,781 134,816- 547,690-

1,070,10

2-

1,213,34

4- 973,203- 567,483

1,673,51

2

1,668,93

9

1,668,93

9

1,668,93

9

1,673,51

2 827,611

CUM.CASH FLOW 134,816- 682,506- 1,752,60

8-

2,965,95

2-

3,939,15

5-

3,371,67

2-

1,698,16

0- 29,220-

1,639,71

9

3,308,65

8

4,982,17

0

5,809,78

1

NPV(%) 18.5

%

0

159,757-

547,690-

903,040-

864,067-

584,855-

287,793

716,204

602,741 508,642 429,234 363,215 151,580

Max Contractor Share USD

11,240,15

4

-

-

-

-

-

943,517

1,876,77

8

1,871,65

0

1,871,65

0

1,871,65

0

1,876,77

8

928,133

I R R 18.50

% 0.18

Development Phase : 66 Months ( From Jan 2014

To End of Jun 2019)

TOTAL CASH IN

Mapna share

T/M B.Ch/CASH FLOW 35.38%

Amortization Period: 72 Months ( From July 2019. To End

of Jun 2025)

10,022,7

81

./

11,240,1

54

89.17% Rem/CASH FLOW 64.62%

Intrest

Rate

7.80

Contract Term : 138+

**

138 Months ( From Jan 2014 To End

of Jun****) Remuneration / Capex = 98.02%

1. Flexible Development Plan

2. Recovery of the costs will start from the First Production Date

3. Annual Work Program and Budget instead of fixed capped costs

4. Full Cost Recovery

5. Balance Risk - Reward approach

6. Flexible Reward considering the oil price changes

7. Reforming the Decision Making process

8. Chance of further Exploration operations in neighboring blocks in case of failure

9. Flexibility for long term cooperation and partnership

10.Longer Term in case of EOR projects

11.Inclusion of Risk Factor by using different Fee

Flexibilities of the IPC:

Thank you