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Iran steps up gas field pressure on foreign firms

Tehran, May 8, 2010

Iran plans to replace foreign companies which have 'dragged their feet for years' with domestic firms in developing its giant South Pars natural gas field, the oil minister was quoted as saying on Saturday.

Massoud Mirkazemi did not name any firms in a report carried by Mehr News Agency. But another official last month said Iran had given Royal Dutch Shell and Repsol one week to decide on their involvement in the offshore field.

Iran says both Anglo-Dutch Shell and Spain's Repsol have procastinated on finalising their involvement in the world's largest reservoir of gas.

It has set similar deadlines in the past as a way of pressuring foreign companies, which have become increasingly wary of investing in the Islamic Republic due to a long-running dispute with the West over its nuclear programme.

'We have recently notified foreign companies, which have dragged their feet for years in some phases of the gas field, that we would not negotiate with them any more and plan to cede the implementation of these projects to domestic companies,' Mirkazemi said.

Ali Vakili, head of the state Pars Oil and Gas Company, said it would soon sign contracts with Iranian companies on the development of South Pars phases 19, 22-24, 27 and 28.

'We will not wait for foreign companies ... Iranian firms possess the necessary capability for the implementation of the South Pars gas field projects from start to end,' the Oil Ministry website Shana quoted him as saying.

Chinese investment

Mirkazemi reiterated that Iran needed to invest $200 billion in its all-important energy sector in the 2010-15 period, but suggested it currently faced a shortage of funds.

Analysts say Iran, which has started issuing bonds to help fund South Pars projects, needs to attract foreign capital to help expand and modernise its oil and gas industries.

'Upon the realization of this level of investment there will be a considerable leap forward in the development of the oil industry in Iran,' Mirkazemi said, referring to the 5-year plan.

But, he added: 'We are currently facing a liquidity shortage for the implementation of various projects.'

Many foreign countries are investing in South Pars, which Iran shares with Qatar, but U.S. and U.N. sanctions have caused Western companies to treat Iran with caution, sometimes to the benefit of operators from other parts of the world.

China's National Petroleum Corporation (CNPC) has clinched a $4.7 billion deal to develop part of South Pars, supplanting Total as lead partner in the project after the French firm delayed its investment decision under political pressure.

Iran has the world's second largest gas reserves but has no major net exports, partly because sanctions have hindered access to Western technology and funding.

Repsol and Shell signed a service contract for the Persian LNG project in 2007, setting out the conditions for exploration and development operations in Phases 13 and 14 of South Pars.

The project covers development of production and exports of liquefied natural gas from a part of the field.

In 2008, Shell delayed decisions on multi-billion dollar investments in Iranian LNG plans due to political tension.

LNG is gas cooled to liquid under pressure for transportation in special tankers. – Reuters




Tags: Iran | Tehran | South Pars | gas field |

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