French Style Farewell by Total

Oil&Gas Materials 16 July 2008 16:19 (UTC +04:00)

Azerbaijan, Baku, 16 June/ Trend , corr A. Badalova/ Iran has become a main hero on the international arena which has absorbed the attention of not only politicians, but also economists. The world security and situation in the world energy market is dependant on it not to a small extent.

The questions concerning the nuclear program of Iran do not subside and it becomes sharper day by day. One of the key events that took place last week which originated hot discussions was the statement of head of French Total Christophe de Margerie in his interview with the British media that the French oil company is withdrawing from the project of development of oil and gas field in Iran and ceasing investments to Iran's economy. Margerie attributed the withdrawal of the company to the 'high political risks'. The French company was to take part in the development of Phase 11 and 12 of South Pars gas field. However, later the Head of the National Oil Company of Iran (NIOC) Seyfullah Cheshnsaz denied information about Total's quitting Iran. According to head of NIOC which operates South Pars, the disseminated information is false and it is just 'satanic plays of West'.

In February, Total stated that it will not quit Iran in spite of any conditions. However, in spring, it began talks on the possible withdrawal from South Pars, motivating it by the rise in the capital expenditures for the project. The English-Dutch RD/Shell and Spanish Repsol withdrew from Phase 13 earlier because of the same reasons.

Many western experts believe that the withdrawal of Total, which is the last large western company in Iran, will inflict a big harm to the further realization of South Pars project. Neither Russian, nor Asian companies can replace the western ones as the project requires specially advanced technologies, experts believe.

The political risk is not the only reason for Total's withdrawal from the Iranian project. The challenges and recent attempts of US to toughen sanctions on Iran which will affect oil and gas sector and more tense relations with Israel are also part of the process.

Last week, the US media reported that the military and air forces of Israel conducted the largest training first time since its inception. The media suppose that the maneuvers of the Air Forces were rehearsal to attack nuclear facilities of Iran. The reports on testing of ballistic missiles of Shahab-3 and Shahab-4 by Iran further aggravated the situation, but these reports were later denied by the western media which disseminated it. The US experts also stressed that that those reports were not correct relying on the video tapes of tests.

All efforts made to force Iran to give up its nuclear program have not yielded results yet. Iran is not going to give up the realization of program and insists that it pursues peaceful purposes. On the other hand, one should take into consideration that Israel considers nuclear program of Iran a threat to its security and it will not allow Iran to possess nuclear weapon as Israeli Premier Ehud Olmert said.

The military operations between the two countries can assume global character full of unpredictable events. In case of attack on Iran, not only world security, but also economic stability all over the world will be threatened. A serious blow will be dealt to the oil market as well.

Iran in fourth for the size of its oil reserves over the world to Saudi Arabia, Iraq and Kuwait all. Iran produces about 4mln barrels of oil a day. It is more than 10% of the total oil production of OPEC, the organization which includes Iran as well. Golamhuseyn Nozari, the minister of petroleum industry of Iran said recently that one more large oil field has been opened in Iran which is evaluated at 1.1bln barrels. In 2007, Iran supplied 4mln barrels of oil to the world markets a day which made up 5% of the total world supplies.

The Secretary General of OPEC Abdullah Salem al Badri warned of the serious consequences for the oil market in case of military offensive against Iran. "If something serious happens, OPEC member states will not be able to supply the Iranian oil to the world market. It is almost impossible to compensate the volumes of the Iranian output," he said.

The analysts unanimously forecast sharp rise in the oil prices in case military offensive is launched against Iran. "The full stoppage of oil production and export will lead to the price rise by 100%," Nasir Hilji, the international economist of the Energy Information Administration of US (EIA) said. The economic analyst of the British The Independent Sean O'Grady believes that the oil prices can reach $250 a barrel in case of war with Iran.

Iran plays an important role in insuring stability of the oil supplies. The Strait of Hormuz, through which 40% of export oil all over the world is transported, is a trump card in the hands of the country. Iran has warned more than once that it will close down this strait in case of attack by Israel.

Thus, not only geopolitical security in the Near East, but also world economy is at stake. The world expects further actions toward Iran which can lead to the global changes and irreversible consequences.

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