Iran Unaware of Shell, Repsol Plan to Quit

FARS NEWS AGENCY: Iran Unaware of Shell, Repsol Plan to Quit

Monday 05 May 2008 / Tehran – 22:22 / GMT – 18:52

TEHRAN (FNA)- Iran said on Sunday that it has not been informed of any plan by Royal Dutch Shell Plc and Spain’s Repsol to withdraw from a $10 billion natural gas project in the Middle East country.

Spanish newspaper Expansion on Saturday reported that the two oil majors were negotiating with the Iranian government to pull out of the gas plan due in part to US pressure.

“I have seen nothing official on that and there has been no reference to that in any domestic negotiations,” Hojjatollah Ghanimifard, international affairs director of the National Iranian Oil Company, said when asked about the report.

The Spanish paper said the firms wanted Iran to agree to drop their current development plans for block 14 of the South Pars field but to allow them to bid for other parts of the field in the future if the international political climate improves.

Shell and Repsol had planned to export South Pars gas by ship in liquefied form as part of the “Persian LNG project”. Now it is more likely the gas will supply the Iranian market or be exported by pipeline, Expansion said.

Iran sits on the world’s second biggest reserves of gas but has been slow to develop exports.

The report said Shell and Repsol were trying to help Iran find new partners for the project and that possibilities included Russia’s Gazprom, Indian Oil Corp and Chinese companies.

The report said Shell and Repsol may sell their 50 percent interest in bloc 14. The rest of the shares are held by Iran’s state oil company NIOC. But they want to make sure that they can keep their interest in blocs 23 and 24, hoping that these can be developed when Iranian-US tensions have eased.

Asian firms, particularly from China and India where demand for energy is surging, have shown increasing readiness to invest in Iran.

China’s Sinopec Group, parent of Sinopec Corp., signed a deal in December to develop Iran’s Yadavaran oilfield. India is discussing plans for a pipeline to receive Iranian gas.

Russia, the world’s top gas producer, has also been eyeing projects in Iran. State-controlled Gazprom said in February it had agreed to develop more phases of Iran’s giant South Pars gas field and drill in some of Iran’s oilfields.

South Pars is one the biggest gas fields in the world, which extends under Iran and Qatar. According to Iran’s Pars Special Economic Energy Zone, the field contains nearly 48 percent of the country’s confirmed reserves.

Following US pressures on companies to stop business with Tehran, many western companies decided to do a balancing act. They tried to maintain their presence in the country but not getting into big deals that could endanger their interests in the US.

But after they witnessed that their absence in big deals has provided Chinese and India companies with excellent opportunities to signing up to an increasing number of energy projects and earn billions of dollars, many western firms are now losing reluctance to invest or expand work in Iran.

Oil giant Total stressed last month that the French company cannot afford to lose deals with Iran as it is one of the largest oil producers in the world.

Total’s Chief Executive, Christophe de Margerie, told Liberation, “Iran is one of the largest oil-producing countries in the world. And in terms of gas, we are far from having made all the discoveries possible. We cannot afford to be absent.”

De Margerie explained that despite the global political situations, oil and gas are not “stop and go” industries with investments covering 20 to 30 year periods. He cited Libya as an example: “It was difficult at times. If we had left, there would never be an income.”

“There is a general decline in oilfields. If we don’t move we’re heading for a real problem. And the decision makers, who have environmental problems in mind, seem to forget the question of access to energy,” he warned.

The Total Chief Executive Officer also said in February, “We have not burnt our bridges with Iran … We will find solutions to maintain our long-term presence.”

The French oil giant Total is mulling over developing Iran’s first liquefied natural gas (LNG) project, which would be fed by phase 11 of the gas field, while Shell is conducting technical studies for developing the phase 13 of the giant South Pars gas field.

Norwegian energy group StatoilHydro said it has planned for a long-term presence in Iran as the country holds huge oil and gas reserves.

“Our main objective is to fulfill our commitments pertaining to phases six, seven and eight of the South Pars gas development projects, Anaran and Khorramabad perfectly and then take into consideration results (of the projects),” Jan Helge Skogen, Statoilhydro’s managing director in Iran said.

“We seek long-term presence in Iran since Iran possesses massive oil and gas reserves, but at present, we are focusing on StatoilHydro’s three current projects and we are ready to mull over new investments,” he added.

According to the StatoilHydro, the company is an offshore operator for development of phases six to eight of the South Pars gas field. The company agreed to conduct a seismic survey during 2007 and to drill exploration wells over a four-year period in addition to gathering additional seismic data in Khoramabad.

American oil companies have also displayed eagerness to attend in Iranian projects.

As a first step several US oil companies participated in the 13th International Oil, Gas and Petrochemical Exhibition (IOGPE) in Tehran in April.

Analysts believe that participation of foreign companies from 30 countries proved their opposition to the US sanctions. Iranian officials also share the same view.

“This indicated that they are disregarding pressures imposed by the world powers to isolate Iran from economic arenas,” Iranian Deputy Minister for Oil Sekhavat Asadi told Iran’s Petroenergy Information Network (PIN).

“It is important first of all from the (oil) industry point of view, because with more than 4 million bpd, Iran is an oil-producing country which cannot be dismissed by any company – sellers of equipment, sellers of services and so on,” Dr. Manouchehr Takin, a senior petroleum upstream analyst with the Centre for Global Energy Studies in London, told The Media Line.

“From the political point of view, I think the fact that politics has not hindered or stopped the exhibition is a significant point. This means that business takes priority over politics,” added Takin.

According to the US Department of the Treasury’s Office of Foreign Assets Control, it is forbidden for “US persons to trade in Iranian oil or petroleum products refined in Iran.”

Americans are also not allowed to finance such trading, and they “may not perform services, including financing services, or supply goods or technology, that would benefit the Iranian oil industry.”

The US is at loggerheads with Iran over the independent and home-grown nature of Tehran’s nuclear technology, which gives the Islamic Republic the potential to turn into a world power and a role model for other third-world countries. Washington has laid much pressure on Iran to make it give up the most sensitive and advanced part of the technology, which is uranium enrichment, a process used for producing nuclear fuel for power plants.

The United States and its Western allies have accused Iran of trying to develop nuclear weapons under the cover of a civilian nuclear program, while they have never presented any corroborative document to substantiate their allegations. Iran has denied the charges and insisted that its nuclear program is for peaceful purposes only.

Tehran stresses that the country has always pursued a civilian path to provide power to the growing number of Iranian population, whose fossil fuel would eventually run dry.

Iran is under three rounds of UN Security Council sanctions for turning down West’s illegitimate calls to give up its right of uranium enrichment, saying the demand is politically tainted and illogical.

Iran has repeatedly said that it considers its nuclear case closed after it answered the UN agency’s questions about the history of its nuclear program.

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