Iran's NIOC signs $2.5 billion deals with domestic firms to boost oil production

In a major push to expand oil production and attract private investment, Iran’s National Oil Company (NIOC) has signed contracts worth over $2.5 billion for drilling services and crude oil processing in the presence of President Masoud Pezeshkian.

The signing ceremony for the crude oil processing services contracts and the onshore drilling rig supply project took place on Thursday, with President Pezeshkian and Petroleum Minister Mohsen Paknejad in attendance.

The agreements were concluded between the National Iranian Oil Company (NIOC) and private and non-governmental companies.

The first contract covers the guaranteed purchase of drilling services. Following extensive negotiations and verification of the investors’ capabilities, NIOC reached an agreement with six companies to supply 20 onshore drilling rigs, each with a capacity of 2,000 horsepower.

The contract, valued at approximately $1 billion over five years, is expected to drill 270 new wells, maintain and increase the country’s oil production, and generate employment for approximately 4,500 people in underdeveloped regions.

The second contract pertains to crude oil processing services aimed at increasing production from the Mansouri (Bangestan), Ab-Teymour, Ramshir, Mansourabad, Karanj, and Golkhari oil fields.  

Under the agreement, NIOC will purchase crude oil processing services through a build-own-operate (BOO) model, valued at over $1.7 billion for a 10-year period.

Over 10 years, the projects are expected to generate revenues of $70 billion and create employment for more than 7,000 people in underdeveloped regions.

During the ceremony, Paknejad said Iran's oil industry is unlocking investment bottlenecks through effective and responsible performance in guidance, oversight and facilitation, adding that oil and gas production has increased under the current administration.

Under the plan, NIOC will, over a five-year schedule, guarantee the purchase of onshore drilling services and related services from private and non-governmental investors, strengthening the country’s drilling fleet in practice, he said.

Paknejad added that the significant increase in drilling rigs means more new wells and accelerated upstream oil and gas development, which, in addition to boosting production, will create a sustainable flow of revenue and employment.

The oil minister said that alongside strengthening the drilling fleet, contracts would also be signed for fast-installation (skid-mounted) crude oil processing units for desalting and sweetening production from six oil fields.

Reviewing the oil ministry’s performance under the current administration, Paknejad said that despite intensified sanctions and various operational and processing challenges, average crude oil production in December increased by 225,000 bpd compared to the start of the current administration.

Alongside increased production, the projects are expected to create about 11,500 direct and indirect jobs for young people and elites, improving livelihoods, he added.

“This is the future path of Iran’s oil industry,” Paknejad said, adding that in this model the government acts as a facilitator and regulator, the private sector as the driving force, and the final outcome is strengthened national power and social welfare.

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