Iran, which signed a huge oil contract with Italian oil group ENI Saturday, June 30, is ready to negotiate another major deal with Japan and to tap western investors for the production of liquefied natural gas (LNG).
ENI and the National Iranian Oil Company (NIOC) signed a contract to develop the Darkhoein oilfield in southwestern Iran in a project expected to cost nearly one billion dollars, with ENI investing $548 million over five and a half years.
The Darkhoein oilfield promises to reap a windfall of 160,000 barrels of oil per day, and signals Iran's eagerness to attract more foreign investment, against opposition from the United States.
Iran boasts the world's third largest oil reserves after Saudi Arabia and Iraq, and the second largest gas reserves after Russia.
ENI, already present in Iran's energy sector with its investment in the South Pars gas field in the country's Gulf waters, has become the second major foreign partner with the Islamic Republic after TotalFinaElf.
The Darkhoein deal only whets the appetite for more foreign investment, as Iranian Oil Minister Bijan Namdar Zangeneh announced plans at the ENI signing to plow ahead in negotiations with Japan on the enormous Azadegan oil field.
The Azadegan field in south-west Iran has oil reserves of between 26 billion and 40 billion barrels.
Zangeneh revealed that Japan "has proposed to us a master development plan. We are going to study it and begin negotiations."
Japan's Trade Minister Takeo Hiranuma, due to visit Tehran this week, said in an interview published over the weekend that Japan had planned to submit a "concrete" proposal Saturday to Iran in developing the Azadegan oil field.
"We will submit a concrete plan to develop the Azadegan oil field to the Iranian side on June 30," Hiranuma, who arrives Tuesday in Iran, told the Nihon Keizai Shimbun newspaper.
A Japanese consortium consisting of partners from the public and private sectors is currently pursuing the development of the oil field, which could become Japan's largest oil field development project.
Hiranuma said he expects to meet with Iranian President Mohammad Khatami and others to lobby for an early start on the project when he visits.
Tokyo has preference on the project after Khatami first offered it the chance to invest during his own trip to Japan last November.
INOC's Vice President Ahmad Rahgozar told AFP that Royal Dutch Shell was expected to invest in the project along with Japan.
The ENI contract is a "buy back"—through which the investor is paid from eventual oil revenues—and includes clauses not used in other contracts between Iran and foreign companies. They guarantee against risks, failure of one of the partners and transfer of technology.
Referring to the US sanctions on foreign companies investing in Iran's energy sector, which are currently up for five-year renewal in the US Congress, Zangeneh said they "are detrimental to the Americans, and to them alone."
Rahgozar also said he expected Iran to announce within the next two months the winner of the contract to develop phases 11 and 12 of the South Pars field including the production of LNG for export.
He added three companies were in contention: TotalFinaElf, British Petroleum, which is already handling South Pars' phases two and three, and ENI, which has the South Pars' phases four and five concessions.
To date, Iran exports little gas, and wishes to sell gas to India via a pipeline through Pakistan.
Iran generated $16 billion in oil sales in 2000, and is expected to earn $22 billion in 2001. Oil revenues make up 82 percent of the country's income. — (AFP)
© Agence France Presse
© 2001 Mena Report (www.menareport.com)