(Bloomberg) -- Iran is set to sign major oil and gas deals with foreign companies in the second half of next year, its first such contracts since international sanctions were lifted in January, according to Wood Mackenzie Ltd.
The first oil under the agreements will flow in 2020, Homayoun Falakshahi, a research analyst at the consulting firm, said Tuesday in an interview in London. Iran has worked on the terms of the Iran Petroleum Contract -- known as the IPC -- for the past three years and should finalize them by the end of 2016, he said.
The IPC will allow oil companies to return to Iran after years of sanctions restrained crude and gas production. Tehran needs $100 billion of foreign investment for the industry, according to National Iranian Oil Co. The country is expected to add an extra 500,000 barrels a day by 2025 from projects signed under the new terms, Falakshahi said.
“It comes down to how good the new contracts are,” he said. “It’s more likely they will still remain very tough; we are probably going to see a few deals but I don’t think we are going to see a huge inflow of companies.”
While the new IPC won’t be as onerous as the previous fiscal terms, known as buybacks, they may still be among the harshest in the world, according to the analyst.
Iran pumped 3.55 million barrels of crude a day last month, almost a quarter more than in January, according to a Bloomberg survey. The country targets 4.8 million barrels a day by 2021, Falakshahi said, citing NIOC.
That level is a best-case scenario that’s unlikely to happen and will depend on how attractive the new contract terms are, according to Wood Mackenzie.