US pressure fails to deter rush for slice of Iranian oil and gas
Lloyds List, July 5
IRAN is about to launch a new wave of foreign investment in its oil and gas sector and has found little trouble attracting interest, despite the threat of US sanctions, Iranian oil minister Bijan Namdar Zanganeh said in Vienna yesterday.
Tehran is set to sign a deal within the next two weeks with Australian energy and mining group BHP Billiton and Iranian partner Petro Iran, he added.
The project will redevelop the offshore Foroozan-Esfyandar fields, tripling output to 150,000 barrels per day.
The Iranian minister said Washington's efforts at discouraging foreign investors from Iran's oil sector had failed to blunt the appetite of international firms.
'These sanctions are only bad news for US companies, not for us because we have done everything that we have wanted in previous years and US sanctions couldn't prevent us from developing our oil and gas fields and our petrochemical plants,' Mr Zanganeh told reporters.
US companies are banned by executive order from Iran while the 1995 Iran-Libya Sanctions Act seeks to punish international companies that invest more than Dollars 20m in the oil and gas industries of Iran or Libya.
Italian energy company Eni was the latest company to defy possible sanctions under ILSA by signing a Dollars 550m deal June 30 to develop the onshore Darkhovin oil field.
Analysts expect the Bush administration to do as little as Clinton officials in applying ILSA.
Sanctions were not applied when Eni and fellow Europeans TotalFinaElf and Shell elected to invest in Iran when it first launched a foreign investment round in the 1990s.
Nonetheless, the legislation looks set for renewal for five years before it expires in August.
The terms for BHP are similar to Eni's for Darkhovin in its inclusion of a risk-reward element based on production guarantees, Mr Zanganeh said.
BHP and its partner face possible penalties if they cannot boost the fields' output to 150,000 bpd from 50,000 in four to five years.
Zanganeh downplayed internal criticism of the buy-back investment model and calls by some members of Iran's legislature, the Majlis, for a re-examination of their terms.
He said Tehran planned to finalise a deal for phases nine and 10 of the South Pars gasfield by the end of August.
Once phase nine and 10 involving surface facilities and refineries are concluded attention would turn to phases 11 and 12 for which France's Total, BP, Eni and Spain's Repsol have submitted separate bids.
Two consortiums were in discussions for phase nine and 10, LG Corp of South Korea and France's Technip.
Zanganeh said Iran aimed to conclude negotiations within 18 months with Japanese firms - Japan National Oil Corp, Indonesia Petroleum, Japan Petroleum Exploration and Tomen - for development of a part of the giant Azadagen field.
He said Iran would have 'no difficulty' with a proposal to involve Shell in the project, but said a decision on its partnership as an investor should be made after the development contract was concluded.
Mr Zanganeh said the Japanese firms had estimated Azadegan - one of the world's largest remaining untapped oilfields - could produce up to 700,000 bpd within a decade.
The minister said Iran aimed to finalise contracts to develop the multi-billion dollar onshore Bangestan project by August after receiving revised proposals from three shortlisted companies - Shell, TotalFinaElf and Eni.
Turning to the Caspian Sea region, Mr Zanganeh said Iran would start operating a 400 km pipeline now under construction linking the port of Nekha to the Tehran refinery by the end of 2002.
The pipeline would transport 380,000 bpd of Caspian oil - a volume representing the total refining capacity of both the Tehran and Tabriz refineries.
Mr Zanganeh said it remained possible for Iran eventually to accommodate 800,000 bpd of Caspian crude produced by Iran and other countries.
If enough crude were produced in the Caspian another pipeline would be built from Tehran to Nekha with Caspian crude either refined in domestically or exported. |
