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Iran Signs $850 Mln Salman Oil, Gas Deal

October 23, TEHRAN (Reuters) - Iran signed an $850-million deal with the Iranian company Petro Iran on Monday to boost oil output and begin natural gas production at the offshore Salman field in the Gulf, state television reported.

It said that under the agreement, oil production would be increased to 130,000 barrels per day (bpd) within three years from the current 85,000 bpd.

The production of 14 million cubic meters (494 million cu ft) of gas per day would begin within four years under the "buy-back" deal, television said.

The field, shared with Abu Dhabi of the United Arab Emirates, would also produce 9,000 bpd of condensates per day.

Iran said in June it had initialed a deal with Petro Iran for the Salman field, with a final signature expected soon.

It was not immediately clear if the Iranian company would carry out the contract alone or seek foreign partners.

Under Iran's so-called buy-back formula, an investing company recoups its capital and makes a profit by receiving part of the project's output.

The Salman project was among $8 billion in oil and gas deals which Iran said in late August it would soon sign or finalize to add one million bpd to its daily crude output and 50 percent to natural gas production.

Iran, the second largest producer in the Organisation of the Petroleum Exporting Countries, seeks to boost its crude output capacity to about five million bpd by 2005 from about 4.2 million bpd now.

The country, which has the world's second largest gas reserves after Russia, is also seeking to develop its largely untapped natural gas resources.


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