In an interview with Tasnim News Agency on Wednesday, Amir Hossein Zamani-Nia said the implementation of Iran Petroleum Contract (IPC) is one of the many strategies Tehran has adopted to attract investment and upgrade the oil industry.
He added that plans are underway to draw $185 billion of fresh investment in all sectors of the oil industry within a 5-year period.
The official further said $85 billion of the investment will go to the industry's upstream sector.
The IPC is to replace Iran's buyback oil deals. Under a buyback deal, the host government agrees to pay the contractor an agreed price for all volumes of hydrocarbons the contractor produces.
However, under the IPC, the National Iranian Oil Company (NIOC) will set up joint ventures for crude oil and gas production with international companies which will be paid with a share of the output.
Based on the IPC, different stages of exploration, development and production will be offered to contractors as an integrated package, with the emphasis laid on enhanced and improved recovery.
Founders of the new contract believe that foreign companies can no longer dash out of their contractual obligations if sanctions are ever reimposed on Iran. But critics cite numerous shortcomings which seriously plague the new formula.
More than 100 energy companies, including Britain's BP, France's Total, Italy's Eni and Spain's Repsol attended a conference in Tehran last November to hear about the IPC.