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Thursday, February 26, 2004
Iran In $2bn Gas Deal with Total and Petronas
February 26, 2004
Gulf Daily News
gulf-daily-news.com
Iran yesterday clinched its first deal in the booming liquefied natural gas (LNG) market and its second major foreign energy deal in a week, agreeing a $2 billion venture with France's Total and Malaysia's Petronas.
State-owned National Iranian Oil Company (NIOC) announced the creation of Pars LNG which will be half owned by the National Iranian Oil Company with Total holding a 30 per cent share and Petronas a 20pc stake.The company plans to produce eight million tonnes per year of LNG and start production by 2009.
"The deal is worth $2b," said a NIOC spokesman.
Iran has the world's second largest reserves of natural gas behind Russia and is developing its giant offshore South Pars gas field with several groups of foreign firms, including Total and Petronas.
Industrialised nations in Europe, Asia and the United States are looking to LNG - gas cooled to a liquid state for loading onto tankers - as a way to meet rising natural gas demand.
Yesterday's deal means that Iran has racked up $4bn of international energy investment in just a week, a dramatic change of pace after a nine-year period when $13bn of foreign cash trickled into its energy sector.
Iran last week signed a $2bn deal with a Japanese consortium to develop its Azadegan oilfield - one of Tehran's biggest international deals since the 1979 Islamic revolution.
The deals have reinvigorated Iran's drive for investment, stalled for years by internal power struggles and Washington's attempts to isolate Tehran. And it has eased fears that the return of hardliners to power in last week's Iranian parliamentary elections would temper enthusiasm for doing business with Iran.
Tehran reopened its oil and gas sector to foreign investment in 1995 with Total and Petronas both in the vanguard. Gas exports have so far been constrained by a lack of cross-border pipelines and delays in getting an LNG venture off the ground.
By contrast, neighbour Qatar is already producing 15m tonnes per year of LNG as it develops gas from its huge North Field, which taps the same reservoir as South Pars.
Iranian oil Minister Bijan Zanganeh has said Iran is eying Asian markets for its LNG, particularly India.
Total confirmed it has signed a deal with Iran to form an LNG production company. "Yes, a shareholders' agreement has been signed. It's just a milestone in the project among many others, and is part of the negotiation process that has been taking place over the last three years," a Total spokesman said.
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