Iran Signs New Model Oil Deal as It Vows to Pump More

Iran on Tuesday clinched the first oil-field deal designed to boost its production, vowing to pump more crude despite a collective OPEC deal to curb output.

Iran’s oil ministry news agency Shana said the government had signed a $2.2 billion contract with a unit of Iranian company Tadbir Energy, which is controlled by a religious foundation overseen by Supreme Leader Ali Khamenei. The deal, the first to be clinched under new improved terms for oil companies, is aimed at increasing output from four fields located near the Iraqi border to 260,000 barrels a day, compared with 185,000 barrels a day previously.

The new deals, which extend the involvement of private companies to typically 20 years, aim at increasing output to 5.7 million barrels a day by the end of 2020, compared with 3.6 million barrels a day in August.

The announcement was made after the Organization of the Petroleum Exporting Countries agreed Wednesday in Algiers to collectively reduce output by between 200,000 barrels a day and 700,000 barrels a day. But Iran—along with Nigeria and Libya—would be exempted from making a reduction, posing a potential challenge to the deal.

Ali Kardor, the head of the National Iranian Oil Co., said Monday that Iran intended to return to the market share it held before international sanctions, implying a production level of over 4 million barrels a day.

WSJ