On 23 February 2021, The Ministry of Petroleum submitted its official request to the Economic Council seeking for their approval to proceed with development of the natural gas fields located at the central regions of the country.

The Deputy of President and Chief of the Planning and Budget Organisation, sent on July 12, 2022 a letter to the Ministry of Petroleum and served the approval issued by the Economic Council on June 29, 2022 in response to the aforementioned request (“Approval”).

The letter states that the Economic Council, reviewed the request and approved the Plan of Development of Natural Gas Fields of the Central Regions of the Country (“Plan”) on the basis of Article 12 of the Law on Removing Barriers to Competitive Production and Improving the Financial System (2015) and subject to compliance with other applicable laws and regulations.

According to the Approval:

• The goal of the Plan is achievement of 100 to 142 million cubic meter increase in daily production of natural gas (via 9 projects listed in Exhibit 2 of the Approval) and of 100 thousand barrels increase in daily production of gas condensate (via 2 projects listed in Exhibit 2 of the Approval).
  
  
• Total costs of the Plan shall be USD 4,437,500,000 that consists of (i) USD 3,302,700,000 for capital costs; (ii) USD 303,300,000 for non-capital costs; and (iii) USD 804,500,000 for costs of finance (financing rate 8%).
  
  
• The ceiling of undertakings acceptable for repayment of the investment costs of the Plan (the principal amounts and the interests) shall be USD 4,437,500,000 sourced by 50% of the income gained from the increment of the production of rich gas and gas condensate stem from the Plan. 
  
  
• In the event that during the repayment period the possibility of selling the gas condensate is restricted, repayment of the future undertakings shall be performed by means of transferring to the contractor the gas condensate extracted in excess of former production capacity. 
  
  
• The contractor should be obligated to complete the project in 48 months starting from the date of effectiveness of the contract. The repayment period should be 7 years.
  
  
• The relevant contracts shall be concluded as EPCF (engineering, procurement, construction and financing).
  
  
• Complying with the environmental regulations and requirements is initial condition and essential for all relevant projects.   
  
  

The authorities in charge of the Plan are respectively the Ministry of Petroleum, the National Iranian Oil Company and the Iranian Central Oil Fields Company.   

 

For more information and advice, please contact us in Tavakoli & Colleagues law firm.