Total again defies US law on trade with Iran
TEHRAN, Dec 21 (AFP) - French oil group Total is again openly defying
US threats to punish foreign companies doing business with Iran, negotiating
new projects with Tehran, one of which involves a vast onshore field.
"With 10 percent of the planet's oil reserves and 15 percent of
the gas reserves, Iran is central to our development strategy. We reject
sidelining this country because of political reasons," Total's Middle
East director, Christophe de Margerie, told AFP.
The group, set to become the sixth-biggest oil company in the world
if it sees through its plans to acquire Petrofina of Belgium, is looking
at one of the three vast Ahwaz oilfields north of the city of Abadan.
Together, they contain an estimated 45 billion barrels of oil, of which
18 billion barrels are believed to be recoverable.
Developing this field would greatly increase Total's reserves and provide
it with a long-term exploitation licence.
Several other oil groups are also said to be considering these and other
fields. Several industry sources said negotations had just opened and no
consortium had yet been formed.
If Total wins the concession, it will once again run the risk of seeing
its US interests targeted under an American law which stipulates punishing
foreign companies involved in deals with Iran.
The D'Amato Law, which came into force in 1996 and runs to 2001, proscribes
major investment in Iran's oil and gas sectors because of Washington's
claim that Tehran is a major sponsor of terrorism.
Total already ran the gauntlet of that law in 1997 when it became the
first -- and so far only -- western company to break the US embargo and
sign a contract for a gas field in Iran in association with Gazprom-Petronas
of Russia.
That time, under intense pressure from the European Union (EU), Washington
backed down and granted Total an exception from the D'Amato law.
This time around, however, the Petrofina deal could complicate matters,
making Total more vulnerable to unilateral sanctions in the United States
through the Belgian companies' various holdings there.
The French group remains confident, however, of escaping a second time.
"The new configuration of the group is not changing our strategy
in the Middle East or in Iran," De Margerie said, adding that the
provisions in the D'Amato law do not target subsidiaries.
"Our objective is to have a presence in all countries where that
is possible. We don't play one country off another, we don't get involved
in politics.
"This region has the lowest extraction costs in the world,"
he said, pointing to costs of two to four dollars a barrel compared to
six to 13 dollars elsewhere.
"It has two-thirds of the world reserves and the largest gas reserves
after Russia."
Total signed a contract in 1995 to develop two oilfields, Sirri A and
E, in the Gulf, close to Dubai's territorial waters, for a total investment
of around 660 million dollars.
It is currently negotiating developing Sirri C and D, which would make
it the dominant player over the whole project and would optimise the use
of its facilities on Sirri Island.
The director of Total Sirri, Dominique Barthe, said: "Our strategy
is a long-term one. We are trying to use our technical knowledge of the
terrain, our experience in the region to develop synergies."
The company's position has reinforced since beginning operations on
the Sirri E concession, having used hi-tech equipment to detect additional
reserves which would extend the viable operational life from four to 12
years at a rate of 100,000 barrels per day (bpd).
Sirri A and E should lead to a production of 120,000 bpd, with the oil
in the two fields estimated at 3.4 million bpd. Total, in association with
Petronas, also has access to major gas reserves which will be sold mostly
through Dubai.
