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Business Times (Malaysia): Iran invites firms to develop South Pars field

March 2 2006
TEHERAN, Wed: Iran placed four new international tenders to develop its South Pars natural gas field, the first ones to be issued since Oil Minister Kazem Vaziri-Hamaneh took office in December.
The state-owned National Iranian Oil Co is inviting international contractors to develop phases 19, 20, 21 and 22 of the field, the world's largest natural gas deposit, documents posted on the oil ministry's website showed.
The four phases are expected to produce 100 million cubic metres a day of gas for Iran's domestic network, the documents showed.
They will also provide at least 2 million tonnes of ethane gas a year, 2.1 million tonnes of liquefied petroleum gas a year and 160,000 barrels of gas condensates a day for export.
Iran's Parliament in December accepted Vaziri-Hamaneh, President Mahmoud Ahmadinejad's fourth nominee for oil minister, ending a political struggle that had left the second-biggest producer in the Organisation of Petroleum Exporting Countries without an oil chief since August.
Iran is competing with Qatar to develop the South Pars gas deposit, which they share.
The contracts will be conducted on a “buyback” basis, according to the tender documents. Iranian contractors and manufacturers will need to contribute to at least 51 per cent of the contract value.
Iran's constitution forbids foreigners to enjoy ownership rights over its natural resources. Instead, they must agree to finance the development of reserves, hand them over to Iranian control once the contracted output target is achieved and then recover their investment at an agreed rate of return from subsequent production under so-called buyback agreements.
Pre-qualification documents for the four phases will have to be submitted before April 1.
Investor wariness about Iran's nuclear programme as well as concern about President Ahmadinejad's protectionist economic policies have slowed down the pace of foreign investment in the Islamic republic during the past 10 months.
The United Nations' nuclear watchdog will meet in Vienna on March 6 to decide whether to ask the Security Council to take action against Iran over its nuclear programme.
Iran says the programme is intended to produce energy for civilian use. The US and the European Union say it may be a front for the development of nuclear weapons.
Meanwhile, in a report yesterday, Total of France and Royal Dutch Shell plc said they did not expect to imminently sign gas production deals with Iran, contradicting earlier comments from an Iranian state-owned oil firm.
The Pars Oil and Gas Co surprised western oil executives and investors at the weekend by saying that Total, Shell and Spain's Repsol YPF were going to sign deals this week to develop the giant South Pars gas field in the Gulf. – Bloomberg

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