France's Elf, Canada's Bow Valley sign Iranian oil
deal
TEHRAN, April 4 (AFP) - Two oil companies, Elf Aquitaine of France
and Canada's Bow Valley, late Sunday signed a 300-million-dollar contract
with Iran to exploit an oil deposit in the Gulf.
The agreement flies in the face of the US D'Amato law, which threatens
to slap sanctions on any foreign company investing more than 20 million
dollars in Iran's oil sector.
The contract, for the development and exploitation of the offshore
site of Balal, was signed in Tehran by representatives of the two companies
and the Iranian oil minister, Bijan Zangheneh.
Elf has 85 percent of the deal while Bow Valley gets the rest.
The agreement is a "buy back" deal, under which the Franco-Canadian
consortium will be reimbursed and paid in the form of crude oil from the
field over a period of about six years.
The Balal field, which lies at a depth of 70 meters (230 feet) 100
kilometers (60 miles) southwest of Lavan island in the Persian Gulf, has
recoverable reserves estimated at 100 million barrels of high quality
oil, according to a press statement issued after the signing ceremony.
The field is expected to produce its first output in 2001, at the
rate of about 40,000 barrels per day, the statement said.
The contract is part of the National Iranian Oil Company's oilfield
development plan, and "reflects Elf's strategy of increasing operations
in the Middle East," the statement added.
The project, initiated by Bow Valley, has run into a series of difficulties
in the past, but the partnership with Elf is expected to enable it finally
to take off.
The contract was first awarded to Bow Valley and the Indonesian company
Bakrie in 1996, but Bakrie pulled out at the height of the Asian financial
crisis, and its place was taken in February by the British company Premier
Oil.
However, Premier Oil's poor financial situation forced it too to withdraw
last week, to be replaced by Elf Aquitaine, Iranian oil sources said.
The Balal contract will strengthen France's leading position as a
partner in Iran's oil industry, following as it does the contract Elf
signed in association with the Italian Eni-Agip in March for an investment
of 540 million dollars at the Dorud site in the Gulf.
France's second biggest oil company, Total, has already signed two
contracts with Iran, one in 1995 and one in 1997, to develop the Gulf
fields of Sirri and South Pars.
The US D'Amato law was passed in 1996 in an attempt to deter investment
in Iran's oil sector, which is vital to its economy, because the United
States accuses Iran of supporting international terrorism, opposing the
Middle East peace process and trying to obtain weapons of mass destruction.
However, Washington has not yet taken any retaliatory measures for
violations of the law, which has been strongly criticised by the international
community in general, and the Europeans in particular.
Iran started opening up its previously completely state-owned oil
and gas industries to foreign firms three years ago, in order to renew
its equipment and develop new sites.
Tehran has already put forward about 40 projects it is willing to
offer to foreign firms under the buy-back formula.
Iran is OPEC's second biggest oil producer after Saudi Arabia, and
depends on oil for more than 80 percent of its foreign currency earnings.
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