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Forbes: Iran Deal Is A Gas For Malaysia’s SKS

Vidya Ram, 12.26.07, 2:30 PM ET
 
Iran doesn’t seem to be having any problems finding allies willing to help it develop its petroleum resources, whatever the objections of the U.S. government.

Iranian National Oil and Malaysia’s SKS Ventures signed a $6 billion contract to develop the Golshan and Ferdows offshore gas fields in Iran, which contain an estimated 60 trillion cubic feet of gas, Minister Gholamhossein Nozari said on Wednesday. He said that a second part of the deal to build plants to produce liquefied natural gas worth $10 billion would soon be ready for signing.

Nozari said that the initial project was expected to be completed by 2014, with Golshan delivering 2.5 billion cubic feet of gas a day,and Ferdos producing more than 880 million. SKS Ventures is a privately held company linked to billionaire businessman Syed Mokhtar AlBuhkary.

The announcement came just two weeks after China’s Sinopec announced a $2 billion contract to develop the Yadaravan oil field in south-west Iran.

Despite the strenuous efforts of the U.S. government to discourage foreign companies from investing in Iran over concerns that the money could be used to support a nuclear weapons program in the country, Iran has found no shortage of takers. After Russia, Iran is estimated to have the world’s second-largest natural gas reserves, though due to American and United Nations-imposed sanctions, the Islamic republic’s are far less developed. Energy companies such as Royal Dutch Shell, France’s Total and Austria’s OMV, have remained involved in operations in the country despite political condemnation. Over the weekend Iran said that it was close to signing an agreement with Italian power company Edison to pump 4.5 billion cubic feet of gas to Europe.

Early in December, an American intelligence report concluded that the Islamic republic ended its nuclear weapons program in 2003, two years before President Mahmoud Ahmadinejad’s electoral victory. Though President George Bush has insisted that Iran remains “dangerous” the report makes it unlikely that the UN will introduce further sanctions.

Malaysia, like China, has strong business links with Iran, including through its state oil firm Pertonas, which has a 10.0% stake in the Pars Liquified Natural gas project, led by Total.

When the talks with SKS Ventures was announced in early 2007, the country faced heavy criticism from the United States, as the House of Representatives Foreign Affairs Committee’s chairman Tom Lantos, demanded that talks with Malaysia over the Free Trade Agreement be suspended. Prime Minister Abdullah Ahmad Badawi remained defiant, announcing that Malaysia was a sovereign country and would “have our own stand”

Thomson Financial and Reuters contributed to this report.

http://www.forbes.com/2007/12/26/iran-malaysia-oil-markets-comm-cx_vr_1226markets08.html?partner=alerts

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