IPC Bid Round: Prequalification
The NIOC just announced that it is offering 50 fields to international bidders, 29 of them oil fields and the remainder gas fields.
What are the timelines of the prequalification process?
- Deadline for accepting the applications to enroll into prequalification for IPC tender: 17th of November 2016
- Announcement of the qualified bidders: 7th of December 2016
- Bid round open: Expected in Jan/Feb 2017
Will these fields be tendered at once? We do not think so. Practically, NIOC does not have that much of contracting manpower to handle the bid process, the negotiation and execution of all 50 projects at the same time. The announcement, however, suggests that the prequalification which is open now, will be the entry point to bid for the group of 50+ projects coming in series of bid rounds. We expect that a group of 10 to 15 high priority fields to be tendered in the first round.
Is the announcement in keeping with market expectations or are there some surprises? The announcement is very timely given the recent reliever in USD transactions (Bloomberg) and US election.
Is NIOC mainly focusing on fields jointly operated with other countries? Priority is given to developing fields with competitive drainage; the ones grouped as West-Karoon fields (in Arvandar area) that are shared with Iraq. The Iraqi side has fast tracked the development of these fields. These fields contribute to more than 50% of Iraq’s production increase over past 7 years. Another priority is the South Pars gas field that Iran plans to bost gas and condensate production to the same level of production at Qatari side by 2018. The oil layer of this field has zero production on Iranian side while the Qatari side has reached 300,000 bpd.
Is the petroleum contract essentially what was announced last summer? In summer the by-law of the IPC was announced (IPC by-law review). A copy will be at reach of those enroll into the prequalification and purchase bid packages. As far as we know the IPC has not changed. Further details might be discussed and negotiated on a case by case basis. This does not mean that the framework of the IPC will change, but given the variety of the investment opportunities, (e.g. exploration, development, EOR/IOR, etc.) there is a fair bit of flexibility for NIOC and the bidders to discuss details before the contract for a specific field is finalized and signed.
What do you detect as the level of interest in the Iranian fields among international operators? Market intelligence suggests that almost all those majors, independents, and NOCs who were engaged in the buy-back contracts (1995-2010) are in direct talk to NIOC and have completed their screening phase. It is hard to predict International interest and engagement in the Iranian IPC bid round given the political climate in the region, dynamics in Iran-West relations, and MoP’s desire to build Iranian E&Ps on one hand, and the service contract nature of IPC on the other hand. Low-cost barrels, access to Iranian market, Iran’s strategic location in the CIS region and several other advantages elevates Iran’s position in energy investment arena. However, all those advantages are under the shade of unknown/unpredictable geopolitical agenda of the nations in the MENA region.