A Major Departure from Service ContractsIran today offered India a new production-sharing regime for oil exploration in what The Hindu daily characterized as “an attempt to keep its third largest buyer of oil engaged, as US and European sanctions cripple its economy.” Iranian Foreign Minister Ali Akbar Salehi made the offer during his talks in Tehran with visiting Indian External Affairs Minister Salman Khurshid. (The Hindu Business Line, 4 May)
India has cut import of oil from Iran by 26.5 per cent in the year that ended on 31 March to comply with EU and U.S. sanctions, The Hindu reported.
The production-sharing offer is a major departure for Iran which has traditionally offered service contract to foreign oil companies, giving them a pre-fixed rate of return for their investments in exploring and producing oil. A production-sharing contract will give the foreign oil company the ownership of the oil explored and produced and the freedom to ship it wherever they desire.