Sep 27 - Oct 03, 2004

Royal Dutch/Shell Group, Europe's second-largest oil company by market value, bid last month to develop new oil fields in Iran as its existing development contracts run out, a Shell spokesman said.

The Iranian National Oil Co., the second-largest state-owned oil company in the Middle East, said last week it was reviewing bids by foreign companies to explore and develop 16 potential oil fields. More than 30 companies bought the tender documents for the developments, Middle East Economic Digest reported on Sept. 3, without saying how it got the information. Shell and China Petroleum & Chemical Corp., known as Sinopec "bid together in the current exploration round in Iran where we see a number of business opportunities in the longer term,'' Shell spokesman Simon Buerk said in a telephone interview from London. "Sinopec is a fast-growing international player and together we are pursuing a number of other opportunities.''

Shell is trying to boost oil reserves and production after revealing earlier this year it had wrongly categorized more than a fifth of its holdings as proved reserves. The US Federal Securities & Exchange Commission allows companies to book oil supplies held under Iranian buy-back agreements even though Tehran forbids foreign companies from owning reserves, which are considered a national resource.

The development of the Soroush and Nowruz offshore oil fields, Shell's only existing oil holdings in the Middle East's second-largest oil producing country, are scheduled to reach total production capacity of 190,000 barrels a day by the end of the year, Buerk said. Shell also owns a 25 percent share in the Pars Oil Co., which produces and markets lubricants in Iran.

Sinopec, Asia's largest refiner, four years ago signed a strategic alliance agreement with Shell for operations in China, which this year overtook Japan as the world's second biggest importer of crude oil.


The Iranian Oil Ministry is currently studying the latest proposals and holding discussions with four international consortiums that have offered tenders to implement phases 15 and 16 of the South Pars oil and gas field.

Asadollah Salehi Foruz, the managing director of the South Pars Oil and Gas Company, announced on September 4 that oil companies from South Korea, Britain, France, Norway, and Switzerland are competing to gain access to the giant South Pars Development Project.

He also said that these companies are required to enter a joint venture with Iranian companies in order to win the bid.

Iran's Sadra Company, the Khatam al-Anbiya Reconstruction Headquarters, and the consortium of subcontractors to Petropars are participating in a bid for the right to develop phases 15 and 16 of the South Pars gas and oil field.

South Pars, the world's largest natural gas field, is located in the Persian Gulf straddling the Iran-Qatar maritime border.

Iran has 18 percent of the world's natural gas reserves, giving it a strategic position in the global gas market.

One of the main programs for the development of Iran's gas reserves is the giant South Pars Development Project.

With the implementation of the 20 phases of the South Pars Development Project, it is projected that a daily amount of 25 billion cubic feet of natural gas and one million tons of gas condensate will be produced, as well as varying amounts of other gas products.

Iran's natural gas reserves are five times those of North America, four times those of Europe, three times those of the Asia/Pacific region, and amount to half of all Middle Eastern natural gas reserves.

Therefore, due to its geographical position, Iran can play a key role in the world gas market and act as a bridge between the giant gas reserves of the Middle East and the great gas-consuming centers in Europe and Asia.

Iran started to export natural gas to Turkey in 2001. It has also signed a contract to export gas to the United Arab Emirates and is in the final stages of talks with Kuwait to seal a gas deal.

Iran is also conducting talks on a project to transfer gas to India through Pakistan. The recent reduction of India-Pakistan tension should facilitate implementation of the project.

Multinational oil and gas corporations have shown great interest in investing in Iran's energy sector.

—Courtesy Tehran Times