Dana Energy updating economic models

As the new petroleum contract is expected to be released in a few weeks, Iranian exploration and production companies are trying to update their economic models used to understand the risks of oil and gas projects and assess how best to manage them.

Under the new contract model whose framework was approved by the Cabinet early in August, multinational energy giants interested in Iran’s upstream oil and gas projects are allowed to invest on the condition that they have a domestic partner. Dana Energy, the sole private company authorized by the Petroleum Ministry to partner with the foreigners, has carried out in-depth research into the oil and gas fields available for investment, a company expert said.

“We already picked up several oil and gas fields and created economic models for them, but as the financial terms of the new petroleum contract are not yet fixed we have to prepare several economic models based on different scenarios,” said Mehras Abaeian, head of economic analysis at Dana Energy’s exploration and production segment.

The economic models are simplified framework designed to illustrate complex processes to lower investment risks. He explained: “We have had to keep an eye on variables such as global oil prices, inflation and taxation, and financial terms of the petroleum contract in the past year in order to maximize our models’ efficiency.”

He further said that his company does have estimation for the profile of several oil and gas fields, but he stressed that the company needs more details of the final version of the IPC [Iran Petroleum Contract] to come to a final conclusion when it comes to economic modeling.

The Petroleum Ministry earlier announced that at least two tenders will be awarded to international energy companies by March 2017. Abaeian came to the conclusion that the ministry, therefore, has to release the final copy of the IPC in a few weeks, arguing that the IPC must be made public long before the two tenders are awarded.

He said Dana Energy experts have deeply examined various aspects of the IPC, though the final version of it is not yet available. “We have examined different scenarios in our meetings, trying to suggest a solution for every possible challenge in our economic models,” he added.

Interviewee:
Mehras Abaeian
Head of Economic Analysis
Exploration & Production