Friday, November 05, 2004

Iran clubs oil field deal with LNG sale to India

Navhind Times on the Web: Business: "Iran clubs oil field deal with LNG sale to India
UNI, Dubai, Oct 10: Iran has said it will approve sale of 20 per cent equity in its Yadavaran oil fields to India only if New Delhi buys LNG from it.

“Iranian government has linked the oilfield development to the purchase of LNG, a move that has surprised many industry experts,” Tehran Times quoted NIOC’s acting managing director, Mr Seyyed Mehdi Hosseini as saying.

The National Iranian Oil Company (NIOC) is in talks with ONGC Videsh Ltd (OVL), the overseas arm of Oil and Natural Gas Corporation, for selling its 20 per cent stake in Iran’s Yadavaran oil fields.

The granting of 20 per cent equity interest to OVL would be made on the condition that an agreement is reached with a Petronet-led consortium for the purchase of 5 million tonne of liquefied natural gas (LNG) a year, for a period of 20 years.

Informed sources say that talks are being carried out at the government level on the deal. Mr Hosseini said Shell, Total, Repsol, Statoil and Norsk Hydro have submitted bids for the development of Yadavaran.

However, these bids are of the buyback type contract and do not contain any commitment on the part of these international oil companies to purchase LNG.

In NIOC’s buyback contracts, the successful bidder undertakes to develop an oilfield as operator, who will hand over ownership of the block to NIOC when commercial production starts and is paid from proceeds from the sale of oil.

The Iranian Energy Minister, Mr Bijan Zanganeh, made the offer for the sale of 20 per cent stake in the oilfield to the Petroleum Minister, Mr Mani Shankar Aiyar when the two met on sidelines of the OPEC conference in Vienna last month. Yadavaran’s oil reserves have been estimated at 17 billion barrels more than 3 billion barrels of which can be exploited and the field is estimated to yield and average of 300,000-400,000 barrels crude per day.

Yadavaran is a new name for both Koushk and Hosseiniyeh oilfields whose oil reserves were initially estimated at 9 billion and 1.5 billion barrels, respectively. Later it was discovered that various formations of the two fields were connected and they were renamed Yadavaran."

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