In a statement NIOC said, “Under the terms of the two and half year and US$27 million contract, Repsol is responsible for exploration expenditures, geology and geophysics surveys and the drilling of two wells. The contract can be extended for one more year, increasing the exploration cost to US$39.2 million.”

According to the firm’s Director of Exploration, Mahmoud Mohaddes, Repsol, like any other foreign firm investing in Iran’s oil and gas sector, has to adhere to certain stipulations under Iranian law.

“For all Iran’s exploration contracts, if the contractor explores a commercially profitable field, NIOC will start negotiations with the contractor for development of the same field. If the talks are positive, the contractor signs a development deal, otherwise we put out a tender,” said Mahmoud.

“Foreign companies are responsible for covering the full cost of exploration if they are unable to make an oil and gas find during the contractual time frame. The explorations are being done at the contractor’s risk,” he added.