Iran In Talks On S Pars Gasfield With Shell,Gazprom-Paper
April 13, 2000 TEHRAN -(Dow Jones)- Iranian oil officials are negotiating
the development of phases four and five of the South Pars gasfield with
Royal Dutch/Shell (RD) and OAO Gazprom (R.GAZ), the " Iran Daily"
newspaper quoted an oil ministry source as saying Wednesday.
" Iranian officials are holding talks to finalize a buyback contract
worth $1.5 billion for the development of the gasfield with an oil consortium
led by Royal Dutch Shell and Gazprom," he said.
In January, the National Iranian Oil Co. (C.NIO) said it was negotiating
with international oil companies to develop the next five phases of the
South Pars gas project in the Persian Gulf and hoped to finalize deals
Phases 1 to 3 of the project have already been awarded, phase 1 to a
local company and phases 2 and 3 - estimated at a cost of $2 billion -
to a consortium comprising France's Total SA (TOT), Russia's Gazprom (R.GAZ)
and Malaysia's Petronas (P.PGS).
Reserves at the field are estimated at 436 trillion cubic feet.
Phase 1, with a capacity of 1 billion cubic feet of natural gas a day,
will become operational by late 2001. Development of phases 2 and 3 is
expected to start at the end of next year.
Phases 4 and 5 are expected to add 1 billion cubic feet a day to the
project's capacity. The whole project comprises 25 phases.
Under a buyback structure, companies investing in Iran 's energy sector
are repaid for their investment in oil or gas from the field once production
In November 1999, Shell signed a contract with NIOC to develop the offshore
Soroush and Nowruz oil fields located off Kharg Island in the Persian Gulf
at an estimated cost of $800 million.
At that time, the company said it was also bidding for a number of other
Shell Overseas Services Ltd. Iran couldn't been reached for comment
However, a spokesman for the company in London said the local report
is consistent with Shell's policy in Iran , and that it has previously
expressed an interest in the South Pars project.
Iran , which owns the world's second largest gas reserves after Russia,
estimated at 20 trillion cubic meters, opened its oil and gas sector to
international tender in July 1998.
A handful of contracts have been signed so far despite U.S. sanctions
against the country.
Under the 1996 Iran -Libya Sanctions Act, or ILSA, international companies
can't invest more than $20 million a year in Iran .
When Shell signed its contract in November, the U.S. launched an investigation
to ascertain whether the deal violated ILSA.
The U.S. has issued a waiver on phases 2 and 3 of the deal which was
signed in 1997.