Middle East Economic Digest
June 4, 1999
The local Iran Power Plant Projects Management Company (Mapna) is in
the final stages of negotiation with a Chinese consortium to finalise a
contract for the construction of a 400-kilometre crude oil pipeline from
the Caspian Sea to Tehran. An agreement on the $350 million project is
expected by the end of June, National Iranian Oil Company (NIOC) officials
Mapna was awarded the contract by NIOC in December, on condition that
it form a partnership with a Chinese consortium comprising China National
Petroleum Company (CNPC) and Sinopec. The Chinese had earlier submitted
one of the losing bids.
Mapna failed to agree with the Chinese and later held abortive talks
with European firms including, reportedly, Initec of Spain and ETPM Entrepose
of France (MEED 26:2:99). Mapna recently went back to the Chinese, "and
they are now very close to agreement", according to officials.
The Neka-Tehran pipeline would carry up to 370,000 barrels a day (b/d)
of oil from Kazakhstan and Turkmenistan for use in Iran's northern refineries.
In exchange, Iran would offer equivalent amounts of oil to customers of
Kazakhstan and Turkmenistan calling at Iranian terminals in the Gulf.
The project is on a build-operate-transfer (BOT) basis and is scheduled
to start operating within about two years. State-owned Mapna has taken
a high-profile role in energy projects in recent years, but NIOC is said
to want direct involvement by foreign oil companies and traders able to
guarantee supplies, and contractors able to guarantee project performance
in order to secure financing and state insurance cover.
ECGD looks at oil and gas projects
The UK's Export Credits Guarantee Department (ECGD) is working towards
an early resumption of insurance cover for UK companies bidding for oil
and gas projects. At least half a dozen projects are being examined by
the department as part of its "good projects" initiative on Iran
launched in late 1998.
An ECGD underwriter was expected to visit the Bandar Khomeini petrochemicals
complex in early June to examine a proposed utility plant project. The
identity of the UK company bidding for the scheme and details of the project
are not available.
ECGD is also considering a project related to onshore facilities for
phases two and three of the South Pars gas field scheme. A source says
talks are taking place with France, whose Total oil company leads a consortium
developing the two phases (MEED 14:5:99).
Information on the remaining projects being examined by ECGD is not
available. UK companies bidding for oil and gas projects include the Royal
Dutch/Shell Group, BG, Enterprise Oil, LASMO and Premier Oil.
Tehran and London restored full diplomatic relations in May (MEED 28:5:99).
ECGD started considering cover for projects in late 1998, but insurance
will for the moment be provided under the so-called good projects initiative
which sets conditions such as the creation of an offshore escrow account
for payments (MEED 8:1:99).