Iran's South Pars: Open for business says minister

Iran says foreign companies are welcome and opportunities remain

Iran shares its South Pars oilfield with Qatar across the Persian Gulf.
Iran shares its South Pars oilfield with Qatar across the Persian Gulf.

Despite newly imposed sanctions, Iran is open for business from foreign investors in oil and gas development as far as its officials are concerned, AFP reported Monday.

"We welcome all international companies, eastern or western. The oil industry cannot be deprived of cooperation," said Mohammad Hossein Mousavizadeh, adviser to Pars Oil and Gas Co, which is developing the giant South Pars fields in Gulf waters.

Several top global energy majors have either quit Iran or are considering an exit since world powers in June slapped new UN sanctions on Tehran over its controversial nuclear programme.

Mousavizadeh said the development of South Pars, which holds about eight percent of world gas reserves, was not affected as Iranian companies were replacing global firms or foreign firms were staying on as associates.

"The development of South Pars is a closed chapter. The contracts have been closed with big consortiums," he told reporters after they were given a tour of phases 14, 15, 16, and 18 of the facility.

"These (Iranian) consortiums have foreign associates ... In the past, foreign companies came as leaders of consortiums such as (France's) Total which was in charge of construction, technology and finance," he said.

"But that model is over now," Mousavizadeh said, indicating that Iranian companies were now leading the projects and sanctions were not affecting the development of South Pars.

"The sanctions are mainly for their companies not ours. We are not worried about sanctions in terms of technology. If we face any problem, we have to plan for it."

Mousavizadeh also gave an explanation of why Khatam al-Anbiya, the industrial wing of Iran's Revolutionary Guards, had pulled out of two development phases - 15 and 16 - of South Pars.

"They (Khatam al-Anbiya) preferred to pull out because of their construction activities elsewhere," he said.

"Any consortium that cannot observe the timetable of the project for any reason should step aside and be replaced. And they have been replaced by domestic companies."

He added that the Guards-run company was "not involved in any other phases" and that it "did not have financial problems," without offering further details.

On Friday, Khatam al-Anbiya said it was pulling out of the two phases as it had been slapped with sanctions and continuing to work in the fields would have "endangered the nation's resources."

Khatam al-Anbiya won the contract in late June 2006 to develop the two phases in a deal worth US$2.09 billion.

The industrial conglomerate is one of 15 Iranian companies linked to the Guards which have been targeted in the latest round of UN sanctions. The firm was created during the 1980-1988 Iran-Iraq war to help rebuild the country. It has since diversified into mechanical engineering, energy, mining and defence, especially under the presidency of Mahmoud Ahmadinejad.

Iran, OPEC's second largest oil exporter, also has the world's second-largest reserves of natural gas after Russia.

The South Pars field, which Iran shares with the Qatar, is comprised of 28 phases and holds around 14tn cubic metres (500tn cubic feet) of gas. But its development has been delayed amid a lack of investment in a country faced with severe gas needs of its own and because of difficulties in procuring the required technology.

The town of Assalouyeh in the southern Iranian province of Bushehr has been chosen as the base for developing the offshore field.

Officials said nearly 50% of the work has been carried out in phases 15, 16, 17 and 18 with first production from these blocks expected from January 2012.

They added that 16,000 people were currently employed in South Pars gas projects, dismissing Iranian media speculations that thousands have had to leave their jobs due to slow development.

In March AlMansoori Specialized Engineering's CEO, Nabil Alalawi said that further sanctions on Iran could help restore lucrative pan-Gulf oilfield services between the GCC and Iran.

“If the sanctions go ahead it would be very damaging to the oil and gas business,” he said.

Alalawi added that although a physical response was a possibility, sanctions may force the withdrawal of many international firms currently working to modernise Iran’s upstream industry.

He predicted that “if the super sanction happens and the European companies walk out of Iran, local companies will be in the position to take advantage.”
 

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