The Japanese government is interested in upstream projects in Iran, including the Azadegan oil field, and intends to provide financial support for Japanese companies once commercial decisions for participating in the projects are made, a senior government official said.
“With Iran holding one of the largest oil and gas reserves in the world, we recognize that upstream developments would be extremely [good opportunity] for Japanese companies,” Yuki Sadamitsu, director of the oil and gas division at the Ministry of Economy, Trade and Industry said in an interview with Platts on Wednesday.
“As the government, we are interested in upstream opportunities including Azadegan in Iran,” Sadamitsu said.
Iran has said it plans to start putting out tenders in April-May for dozens of oil and gas developments using its redesigned upstream contracts model.
In its Tehran seminar in November, Iran introduced a total of 70 oil and gas projects for foreign participation, including 52 development and 18 exploration projects. The development projects comprised 29 oil fields and 23 gas fields.
The Iranian oil development projects include the giant onshore South Azadegan field, offshore Soroosh and Norooz fields as well as enhanced oil recovery projects at the major but aging onshore Ahwaz-Bangestan, Mansuri-Bangestan and Ab-Teymour fields.
Asked to comment about Japan’s potential interests for participating in projects in Iran, Sadamitsu said the government has kept its options open for exploration, development and enhanced oil recovery projects, leaving it to the Japanese companies to make commercial decisions.
But Sadamitsu said it remains unclear whether Iranian upstream projects will be “attractive” compared to projects in other countries such as in Iraq as there are still areas that need to be clarified in the new Iran Petroleum Contract (IPC).
The IPC replaces the buy-back model, which did not appeal to foreign investors due to its short-term involvement in projects and poor rates of return. It also lacked another incentive, which is to confer of ownership of reserves onto the contractors.
Iran is targeting an eventual 2 million b/d of new crude production capacity from the 50-plus upstream development projects it has planned to introduce to potential international investors under the modified contracts.
GOVERNMENT FINANCE
While noting Japanese companies are running a series of cost reviews in the low oil price environment, Sadamitsu said the government is looking at ways to enhance its financing schemes to help the companies making new upstream investments.
“Especially under the current difficulties, we are looking at whether the [government] can take more risks if private companies are making their commercial decisions,” Sadamitsu said.
Asked about the potential size of Japan’s overall financial supports for Japanese companies to participate in E&P projects or acquire upstream assets under the existing frameworks, Sadamitsu said it could amount to “several billion dollars” in a year.
The government support will come in the form of METI’s annually budgeted financial assistance through state-owned Japan Oil, Gas and Metals National Corp., as well as possibly from state-owned Japan Bank for International Corp., Nippon Export and Investment and Insurance, and Japan International Cooperation Agency, Sadamitsu said.
IRANIAN CRUDE IMPORTS
Asked to comment about the outlook for Japan’s crude imports from Iran in 2016, Sadamitsu said: “It is possible they will increase.”
“Though it would depend how much Iran can offer on competitive terms,” said Sadamitsu, stressing that Japanese refiners and trading houses are extremely cost-cautious.
“If Iran offers good terms, there are plenty of chances for the increase as [companies] are more sensitive to price and quality,” Sadamitsu said.
Japan’s crude imports from Iran plummeted in recent years due to sanctions imposed in 2012. They averaged 170,360 b/d in 2015, compared with 313,480 b/d in 2011.
On February 5, Japan signed a bilateral investment treaty with Iran, following its lifting of key oil, gas sanctions against Iran on January 22.
Japan keen on Azadegan, upstream projects in Iran | Hellenic Shipping News Worldwide
“With Iran holding one of the largest oil and gas reserves in the world, we recognize that upstream developments would be extremely [good opportunity] for Japanese companies,” Yuki Sadamitsu, director of the oil and gas division at the Ministry of Economy, Trade and Industry said in an interview with Platts on Wednesday.
“As the government, we are interested in upstream opportunities including Azadegan in Iran,” Sadamitsu said.
Iran has said it plans to start putting out tenders in April-May for dozens of oil and gas developments using its redesigned upstream contracts model.
In its Tehran seminar in November, Iran introduced a total of 70 oil and gas projects for foreign participation, including 52 development and 18 exploration projects. The development projects comprised 29 oil fields and 23 gas fields.
The Iranian oil development projects include the giant onshore South Azadegan field, offshore Soroosh and Norooz fields as well as enhanced oil recovery projects at the major but aging onshore Ahwaz-Bangestan, Mansuri-Bangestan and Ab-Teymour fields.
Asked to comment about Japan’s potential interests for participating in projects in Iran, Sadamitsu said the government has kept its options open for exploration, development and enhanced oil recovery projects, leaving it to the Japanese companies to make commercial decisions.
But Sadamitsu said it remains unclear whether Iranian upstream projects will be “attractive” compared to projects in other countries such as in Iraq as there are still areas that need to be clarified in the new Iran Petroleum Contract (IPC).
The IPC replaces the buy-back model, which did not appeal to foreign investors due to its short-term involvement in projects and poor rates of return. It also lacked another incentive, which is to confer of ownership of reserves onto the contractors.
Iran is targeting an eventual 2 million b/d of new crude production capacity from the 50-plus upstream development projects it has planned to introduce to potential international investors under the modified contracts.
GOVERNMENT FINANCE
While noting Japanese companies are running a series of cost reviews in the low oil price environment, Sadamitsu said the government is looking at ways to enhance its financing schemes to help the companies making new upstream investments.
“Especially under the current difficulties, we are looking at whether the [government] can take more risks if private companies are making their commercial decisions,” Sadamitsu said.
Asked about the potential size of Japan’s overall financial supports for Japanese companies to participate in E&P projects or acquire upstream assets under the existing frameworks, Sadamitsu said it could amount to “several billion dollars” in a year.
The government support will come in the form of METI’s annually budgeted financial assistance through state-owned Japan Oil, Gas and Metals National Corp., as well as possibly from state-owned Japan Bank for International Corp., Nippon Export and Investment and Insurance, and Japan International Cooperation Agency, Sadamitsu said.
IRANIAN CRUDE IMPORTS
Asked to comment about the outlook for Japan’s crude imports from Iran in 2016, Sadamitsu said: “It is possible they will increase.”
“Though it would depend how much Iran can offer on competitive terms,” said Sadamitsu, stressing that Japanese refiners and trading houses are extremely cost-cautious.
“If Iran offers good terms, there are plenty of chances for the increase as [companies] are more sensitive to price and quality,” Sadamitsu said.
Japan’s crude imports from Iran plummeted in recent years due to sanctions imposed in 2012. They averaged 170,360 b/d in 2015, compared with 313,480 b/d in 2011.
On February 5, Japan signed a bilateral investment treaty with Iran, following its lifting of key oil, gas sanctions against Iran on January 22.
Japan keen on Azadegan, upstream projects in Iran | Hellenic Shipping News Worldwide
