Iran Parliament Committee OK’s Buy-Backs
Iran’s parliamentary energy committee has given a nod of approval to government plans to allocate $2.8 billion for buy-back deals with foreign oil companies to develop the country’s giant Azadegan oil field, according to the Hayat-e No newspaper on January 2nd.
Iran’s draft budget proposal for the year beginning March 2001 allows up to $2.8 billion for investment in the field, but many parliamentarians had been opposed to the plans.
Parliamentarian Ali Hashemi indicated that the government would have to accept buy-back deals because many foreign firms have resisted other schemes and Iran’s constitution does not permit production-sharing agreements.
Hashemi, a former deputy oil minister, said that: “Although some deputies have voiced their opposition, the oil ministry has no choice but to go ahead with the buy-back deals.”
Azadegan, located in the southwestern province of Khuzestan near the Iraqi border, is the world’s largest find since the 5.5 billion barrel Priobye field was discovered in Russia in 1982.
The field has an estimated 6 billion barrels of recoverable reserves, and production from the field is expected to reach up to 400,000 b/d after several years of development.
At current estimates, the field, measuring 200 square miles, could bring in total revenues of $100 billion.
In early November, Iran and Japan reached an agreement to grant Japanese firms priority rights to discuss the development of the field after a landmark visit to Tokyo by Iranian President Mohammed Khatami.
Japanese oil firms interested in developing part of Azadegan have until June 2001 to submit proposals to the National Iranian Oil Co. (NIOC). Iranian oil officials have said, however, that other firms can submit bids after the June deadline.
Hashemi indicated that granting priority negotiating rights for the field to Japanese companies was one of the conditions necessary for securing a $3 billion loan for oil and gas development from Tokyo.
© 2001 Mena Report (www.menareport.com)