Friday, October 29, 2004

The Daily Star - Business Articles - China signs $70 billion oil and LNG agreement with Iran

The Daily Star - Business Articles - China signs $70 billion oil and LNG agreement with Iran: "China signs $70 billion oil and LNG agreement with Iran
Deal's political benefits could arrive before economic ones

By Agence France Presse (AFP)
Saturday, October 30, 2004
BEIJING: State oil giant Sinopec Group has signed a $70 billion oil field development and liquefied natural gas agreement with Iran, China's biggest energy deal with the No. 2 OPEC producer, an Iranian official said Friday.

The preliminary deal may yield political benefits far sooner than commercial ones as Iran courts China's favor on the UN Security Council, where Beijing holds a potential veto over any action against the Islamic Republic's nuclear program.

Under a memorandum of understanding signed Thursday, China's second-largest oil firm, Sinopec Group, will buy 250 million tons of LNG over 30 years from Iran and develop the giant Yadavaran field, said Seyed Mehdi Hosseini, deputy general manager of the National Iranian Oil Company.

"We've committed to sell Sinopec - after commissioning of the field - 150,000 barrels per day of crude for 25 years at market prices," Hosseini said.

Sinopec officials weren't immeditately available for comment. But LNG deliveries will not begin for at least five years as Iran struggles to catch up with industry frontrunners such as Qatar and Algeria, while the estimated 3-billion barrel Yadavaran field in the southwest will take at least four years to develop.

No time frame has been set for finalizing the investment and negotiations over Iranian oil deals often drag on for years.

Oil Minister Bijan Zanganeh is on his last day of a two-day visit to Beijing to pursue closer ties with China, whose biggest oil supplier is Iran, contributing 14 percent of imports.

Chinese companies have been prominent investors in the underperforming oil industry of OPEC's second-biggest producer, including Sinopec's construction of a huge oil terminal on the Caspian and deals to upgrade several refineries.

But Beijing has thus far been wary of incurring U.S. wrath through the Iran Libya Sanctions Act (ILSA), which threatens penalties for firms making big investments in Iran.

Iran denies U.S. claims its nuclear power program is a smokescreen for developing an atomic bomb, but its nuclear dossier is edging closer to the UN Security Council for possible sanctions.

European and Asian oil firms have also pursued Iranian deals despite ILSA, most notably Japanese INPEX's $2 billion agreement to develop the Azadegan field this year.

China leapfrogged Japan this year as the world's second-largest energy consumer, with oil demand expanding by nearly 15 percent and firms keen to secure direct oil field access.

That drive is putting China in direct competition with other fast-growing Asian economies like India as well as the U.S., the top energy user, all of whom are having to source more imported crude as domestic production falls.

Major oil exporters, particularly in the Mideast, are also anxious to boost ties with China, which will provide a market to ensure future projects.

Chinese state oil trader Zhuhai Zhenrong Corp agreed earlier this year to buy over 110 million tons of LNG from Iran over 25 years for $20 billion. But China has also signed up for purchases of LNG with Australia and Indonesia.

Hosseini said the Yadavaran oil field, which officials estimated earlier this year could hold over three billion barrels of recoverable reserves, would have a total production capacity of around 300,000 bpd.

The deal - under an emerging framework by which Iran ties LNG purchases with oil field development - is seen as more beneficial for Sinopec than the traditional buyback contracts, which apply to most foreign development deals in Iran.

China has also signed a preliminary accord with Iran to buy 10 million tons of liquefied natural gas a year, Iran's petroleum minister said Friday, as he urged Chinese oil firms to play a bigger role in developing the industry in his country.

A successful deal would help Beijing's effort to secure foreign energy supplies for its economy, which has turned China into a major oil importer but suffers severe power shortages.

Iranian Petroleum Minister Bizhan Namdar Zanganeh, in Beijing for a conference on promoting Iranian-Chinese energy cooperation, wouldn't give any details of the proposed deal.

"It needs more time to finalize the details and to sign the final contract," he said, appealing to China's state-owned oil firms to expand their role in Iran, calling it a "natural partner" to fuel China's economy.

Collaboration with Beijing would bring Tehran a new source of skills and investment at a time when U.S. sanctions block U.S. oil companies from doing business with Iran.

"We have invited Chinese companies ... to actively participate in our exploration and development projects," Zanganeh said, promising them "the greatest incentives," including tax exemptions.

Tehran plans to invest $50 billion in its energy industry over the next five years, expanding oil production capacity from 4.2 million barrels a day to 5 million, Zanganeh said. He said Iran puts the size of its reserves at 130 billion barrels of oil and 28 trillion cubic meters of gas.

Zanganeh also boasted that Iran was developing the industry in spite of "hardships unfairly placed in its path to progress," an apparent reference to U.S. sanctions. China imported 85 million barrels of Iranian crude oil last year, according to Zhang Guobao, deputy chairman of China's National Development and Reform Commission.

"China highly values oil cooperation with Iran," he said.

Beijing has been signing deals to develop oil and gas resources as far as away as Iraq, Venezuela and Sudan.

A Chinese oil firm signed a preliminary agreement in March to buy 2.5 million tons of Iranian liquefied natural gas annually in a 20-year deal worth $20 billion, according to news reports. It wasn't clear if that was included in the 10 million ton-per-year figure Zanganeh cited.

China is stepping up its use of cleaner natural gas, trying to reduce its reliance on abundant but dirty coal. A Chinese-led consortium also is building a pipeline to carry gas from China's northwestern Xinjiang region to Shanghai, the country's commercial capital."

Russia completes work on Bushehr reactor in Iran

Russia completes work on Bushehr reactor in Iran: "Russia completes work on Bushehr reactor in Iran

Russia has completed construction work at the Bushehr nuclear reactor in Iran and hopes to sign agreements on shipping nuclear fuel in November, officials said on Friday, AP reported.

2004-10-28 17:45

"All the external (construction) work has been finished and the main equipment shipped," Vitaly Nasonov, spokesman for Russia’s Federal Atomic Energy Agency, told The Associated Press. Nasonov said Atomic Energy Minister Alexander Rumyantsev is scheduled to travel to Iran next month to sign agreements on shipping nuclear fuel to Iran and returning the spent fuel back to Russia. But industry sources say the signing depends on the outcome of a Nov. 25 International Atomic Energy Agency meeting, which would decide whether to refer Iran to the UN Security Council for possible sanctions.

The agreements have been delayed repeatedly. The United States fears that the $800 million Bushehr deal could help Tehran build nuclear weapons. Russia says that having Iran ship spent nuclear fuel back to Russia will make any such projects impossible. Nasonov said that if all goes as planned, the reactor should be launched in 2005 and connected to the country’s energy system in 2006. The ITAR-Tass news agency said that the reactor’s control and security equipment still had to be mounted. Most is being provided by Russian enterprises but Iran will buy some from other countries, the news agency said.

The 1,000-megawatt Bushehr plant is due to be launched in the next year or so and reach full capacity in 2006."

IranMania News: Iran, Syria call for cooperation

IranMania News: "Iran, Syria call for cooperation

Friday, October 29, 2004 - ©2004
LONDON, Oct 29 ( IranMania) - Minister of Industry and Mines Eshhaq Jahangiri and Syrian Minister of Transportation Makram Obeid in a meeting in Damascus Thursday stressed cooperation in transportation sector between Tehran and Damascus, Islamic Republic News Agency reported.

They expressed hope that with rescission of violence in Iraq and establishment of peace and stability in the war-torn country, bilateral trade will be carried out through Iraq "which will considerably increases the mutual trade volume and lower the costs."

Jahangiri also pointed to Iran`s progress in manufacturing train wagons, vehicles and road transportation machinery.
In a separate meeting with Syrian Economic and Commerce Minister mer Hosni Lotfi, the visiting Iranian minister of industry and mines said "the trend of the two nations cooperation has been positive during the past decade."

The two side emphasized the need for greater participation by the private sectors of the two countries in the economic and industrial spheres.

Jahangiri also participate with the his Syrian counterpart in the 4th Iran-Syria Industry and Mining Committee meeting.

In the meeting discussions were to render support to the Iranian car manufacturers `Saipa` and its Syrian counterpart in producing pride` Models in Syria.

The two ministers also agreed that if the activities by the Siamco` cooperation (Samand) are economically feasible, building the truck and auto-bus producing plants will also be considered by the two

Syria has expressed satisfaction on the job performed by the Iranian experts on the repairs carried out at the `Ammonium` arm of the Syrian Petrochemical company.

Iran and Syria here Tuesday night called for promotion of bilateral cooperation to the level of their political relations.
Jahangiri, in a meeting with his Syrian counterpart Ghassan Tayyarah, said Iranian officials will do their utmost to boost joint cooperation with Syria, particularly in industrial fields.

He voiced his country`s readiness to share experiences with Syria and invited Ghassan to pay a visit to Iran to become more familiar with the country`s achievements.

Tayyarah said implementation of the two giant projects including the Iranian-built cement production plant in Hama and the first Iranian-made automobile factory for the Iranian national car of Samandare among the important industrial cooperation between the two sides and called for further cooperation in this regard.

The two ministers expressed their eagerness to exchange technical and engineering experiences in industrial fields and hoped their talks would lead to setting a program for future bilateral industrial