China Is Now Iran's Biggest Energy Buyer, Europe Steps Up Oil Activity
Asharq Al Awsat, News Report,
Translated by Jalal Ghazi, Link TV, Mosaic, Jan 20, 2005
Laws ban American companies from investing more than $20 million in Iran annually. However, a lot of other foreign investments are being sent there, and several gigantic projects are being planned to exploit Iranian natural gas, one of the largest reserves in the world. China has become the leader of the pack of energy importers from Iran.
Energy experts have been interested in the economic deals that were signed by China and Iran reaching a total value of $200 billion. Iranian Oil Minister Bijan Namdar Zanganeh said China will replace Japan as the number one oil and gas importer from Iran. In 2003 Iran’s oil exports to China reached $2.5 billion; the number was higher in 2004.
Iran is estimated to have 26.6 trillion cubic meters of gas reserves, which explains why one the biggest Chinese energy companies, Sinopec, was invited to prepare the planning of a project to develop the gigantic Yadavaran field. The project includes exploration, petrochemical products production and pipeline construction.
In return, Sinopec will import 250 billion tons of gas in the next 25 years worth $70-100 billion. This is the largest economic deal concluded between the two countries since 1996. China is also looking forward to exporting various products to the large Iranian market.
Foreign investors still have ample opportunities in oil and gas exploration and production. A number of international companies are already operating in Iran, including Shell, Total and the Spanish Repsol company, which is working on plans linked to the gigantic Southern Pars Project.
Some of the most important energy projects already started in Iran include developing the Northern Pars oilfield, building a number of facilities for liquid gas on the Gulf coast and extending oil pipelines to export natural gas to Turkey to accommodate increased demand from southern Europe. Gas is scheduled to be pumped into Europe by 2008.
Iran currently produces 80 million cubic meters of natural gas annually, which is equivalent to what Norway produces. Developing the Northern Pars oilfields and extending the pipelines will cost approximately $150 billion in the next ten years.
The French oil company Total won a bid to develop the Northern Pars oilfields and build facilities to produce liquid gas in Tehran. The Iranian national oil development company organized the bidding contest.
The French company promised to take charge of engineering projects and plans concerning the production of liquid gas in an Iranian plant by 2006.
Currently, Iran exports 2.5 million oil barrels a day and its petrochemical exports are expected to increase to 25 million tons in the next ten years.
To attract foreign investments, Iran started privatizing its national oil carrier and shipping line IRISL, which owns 87 cross-ocean oil transports, making it the largest oil fleet in the Middle East. The ongoing large gas deals are expected to increase the demand on these transports.
A representative of a British company that does maintenance work on the Iranian oil refineries, told Asharq Al-Awsat that there is an unprecedented level of activities in the Asaluyeh coastal area right across from Qatar.
He said that a large number of natural gas refineries and plants are being built in coordination with European companies there. “The demand on the technical services of our company, especially in the Iranian oil refineries, is constantly increasing,” he added.
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