Iran’s oil and gas industry requires $255bn of investment to carry out the government’s development plans as the country seeks partnership with overseas companies to develop its assets, according to the deputy oil minister.

The Islamic republic plans to increase its oil production to 5 million barrels a day (b/d) by 2018 compared with oil producers group Opec’s estimate of 3.74 million b/d in 2013.

“Iran plans to make new strategies based on effective constructive and stable interaction with world’s oil and gas key players – national oil companies [NOCs] and international oil companies [(IOCs] – through a win-win approach,” said Ali Majedi, deputy oil minister for international affairs and commerce, speaking at a conference in Dubai on 14 April.

Iranian oil production has dropped since the US tightened economic sanctions against Tehran in early 2012.

However, the interim nuclear agreement signed with world powers in November 2013 has relaxed some sanctions with the potential for further relief in following rounds of negotiations this year.

“Based on the development plan of Iran, the oil and gas industry required about $255bn of investment, of which about $155bn should be directed the upstream sector,” said Majedi.

He added that the midstream and downstream oil industries should receive $21bn, with midstream and downstream gas needing $41bn and petrochemicals industry requiring $38bn.

Iran plans to offer new terms for overseas companies to develop its oil and gas fields. Under the new integrated petroleum contract (IPC), Iran will offer 25-year contracts to allow IOCs to operate oil and gas fields over the long term.

The system replaces the unpopular buy-back system, under which foreign companies were required to leave a project after its completion, before being paid from the oil revenues.

Majedi said the new system would align government and contractor offtake, integrate exploration development and production, provide longer-term contracts and offer incentives for investors to be involved in high-risk areas.

While most western and Asian companies operating in Japan’s oil sector have cut ties with Tehran amid international sanctions, Majedi said that Chinese companies were operating in the country.

Earlier in April, Iran gave an ultimatum to China National Petroleum Company International (CNPCI) to meet its deadlines on the development of South Azadegan onshore oil field.