Iran adopts oil pact as glut no barrier to boost output

Bloomberg

Iran approved a new oil contract model, taking the OPEC nation a step closer to welcoming foreign investment in its energy industry and boosting production even more into an oversupplied market.
The contract model was approved at a cabinet meeting Wednesday, according to the official Islamic Republic News Agency. Priority will be given to boosting output at jointly owned oil and gas fields, state radio reported, citing Oil Minister Bijan Namdar Zanganeh. Iran wants to lure international companies that can make long-term investments worth billions of dollars and bring technology after sanctions were eased in January.
Iran has been working on the oil contract model for the past two years. The country hopes companies will invest as much as $50 billion a year. It’s already succeeding in meeting its pledge to regain market share it lost due to the sanctions over its nuclear program. Production was 3.55 million barrels a day in July, 27 percent higher for this year and the most since December 2011, according to data compiled by Bloomberg. “Any process is going to take time and a lot of steps before any investment goes into the ground,” Edward Bell, commodities analyst at Emirates NBD in Dubai, said by phone. “This isn’t going to be a step change in the way markets are going now.”