Iran has approved a new oil contract model, a move that brings the country closer to luring foreign investment for its energy industry and boosting oil production.

Cabinet ministers ratified a draft on general conditions, structure and models of upstream oil and gas contracts, according to the official Islamic Republic News Agency. The methods of ‘supervising the signing process of oil contracts’ were discussed at the meeting. The document still needs to be reviewed by parliament for final endorsement, Iran’s Oil Ministry news service Shana reported.

Petroleum Minister Bijan Namdar Zangeneh this week said that once the contracts are ratified, their executive phases would be finalised. Priority will be given to boosting output at jointly owned oil and gas fields.

Iran aims to lure international companies that can make long-term investments worth billions of dollars and bring technology after sanctions were eased in January.

The Opec member had been working on the oil contract model for the past two years. The country hopes international oil giants will invest as much as $50bn a year.

Big oil companies, mostly from Europe and including Italy’s Eni SpA and France’s Total SA have expressed an interest in developing Iran’s oil and gas fields.

State-owned National Iranian Oil Company (NIOC) is also planning to release a list of international oil companies (IOCs) eligible to bid on oil and gas field developments within the next two months.

Managing director Ali Kardor said that, not including American companies, there are 37 groups that meet the required standards for taking part in NIOC tenders.

American companies are unlikely to show interest in the Iranian oil sector due to the remaining US sanctions against the Islamic Republic and domestic political pressure.

Iran is already succeeding in meeting its pledge to regain market share it lost due to the sanctions over its nuclear program. Production was 3.55 million barrels per day (b/d) in July, 27 per cent higher for this year and the most since December 2011, adding to an already over-supplied market, according to news agency Bloomberg.

“Any process is going to take time and a lot of steps before any investment goes into the ground,” Edward Bell, commodities analyst at Emirates NBD in Dubai, told the news agency. “This isn’t going to be a step change in the way markets are going now.”

Brent crude prices fell 15 per cent in July amid a growing recognition the global surplus of crude will take time to clear. Iran is aiming to reach an eight-year high for daily output of 4 million barrels by the end of 2016, with foreign investment helping it regain the position as Opec’s second-largest producer. It was third largest in July.