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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