Iran sets pre-condition for oil contracts with Shell, Total

Photo: Iran sets pre-condition for oil contracts with Shell, Total / Oil&Gas

Baku, Azerbaijan, Jan. 14

By Rahim Zamanov - Trend:

Giant oil companies such as Shell and Total need to use the full capacity of Iran's domestic manufacturers in order to carry out projects in the country's oil and gas sector, Deputy Oil Minister Emad Hosseini said on Jan. 14, the Mehr News Agency reported.

"Domestic manufacturers also need to boost the quality of their products in order to meet global standards" he explained.
"The cost of oil and gas projects has been increased by three to four times in the past few years," Hosseini said.
He made the remarks at the sideline of the 10th edition of Kish International Energy Exhibition.

Iran on Dec.4 named seven Western oil companies it wants back in its vast oil and gas fields if international sanctions are lifted and said it would outline investment terms in April next year, Reuters reported.

Iranian Oil Minister Bijan Zanganeh named the seven in order: Total of France, Royal Dutch Shell, Italy's ENI, Norway's Statoil, Britain's BP and U.S. companies Exxon Mobil and ConocoPhillips.

Iran has the world's fourth-largest proved national reserves of oil - most of it cheap to produce - and is home to the biggest proved reserves of natural gas, some 18 percent of the global total.

With nationalization in the Islamic revolution of 1979, the oil companies were thrown out and Iran's share of world oil production fell to below 40 percent by 1997 from 55 percent in the 1970s. They drifted back in the 1990s, and Zanganeh oversaw that return as minister in the reformist government of 1997-2005.

Total moved back into onshore fields in 1997 and Shell in 1999, both while Zanganeh was minister, and both in defiance of U.S. sanctions. President Bill Clinton had blocked a Conoco project in 1995.

But Iran's production stagnated through the 2000s amid growing international tensions over its nuclear program. The more effective sanctions instituted in 2012 have choked out foreign investment and sent output down to 2.65 million barrels a day in November from an average of 4.3 million in 2011.

Iran reached an interim deal last month with six western powers to limit its nuclear program, under which sanctions on oil investment and trade with Iran may be eased next year - although for now the agreement does not explicitly include a relaxation of the controls on Iranian oil sales.

Speaking to reporters at an OPEC meeting, Zanganeh said he was already talking with some companies, although so far not those from the United States.

"We had no limitations for U.S. companies. Twenty years ago there were limitations against them from their own administration. For doing projects in Iran, we have no limitations," Zanganeh said.

He is due to meet senior executives from Western oil companies including Eni and Shell on Thursday, an Iranian oil official said.

Zanganeh made no mention of Russian, Chinese or Japanese companies or those of other nationalities. Asked whether he would like to see Asian, Indian or Chinese companies coming to Iran as well, he said: "Yes, but now we are discussing with European (firms)".

He said contract terms would be better than those in post-war Iraq, which limited oil companies to operating fees rather than the share of production deals they prefer.

"I cannot say more about the detail," Zanganeh said.

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