Royal Dutch Shell and Spain's Repsol YPF on Saturday signed a buyback deal, for the upstream part of the Persian LNG project, with Iran's National Iranian Oil Co. (NIOC), Iranian and company sources said Energy Intelligence Group Monday, Trend reports.
The signing of the upstream service agreement -- the first legal document to be signed since the parties agreed to a framework deal in 2004 -- represents a step toward the final investment decision, which would give the final green light to the project. The final go-ahead is not expected before the end of 2007. Other agreements, including those dealing with the midstream part of the project, are still pending.
"The terms of the deal signed will come into force once the parties decide to go ahead. That decision is one year away. It will also depend on reaching a deal on the midstream component of the project," a Shell spokesman told International Oil Daily Monday.
Under the buyback deal, Shell and Repsol, each of which has a 50% share in the venture, will invest to develop Phases 13 and 14 of the South Pars gas field, and supply 3 billion cubic feet per day of gas to the LNG facilities. They will also produce about 110,000 barrels per day of condensate. At the end of the term of that deal, the two foreign companies would hand over the upstream facilities to NIOC. The foreign investors would recuperate their investment plus interest and an agreed remuneration fee.
The gas to be produced from Phases 13 and 14 will be supplied under a gas sales agreement to another joint venture, Persian LNG, in which Repsol and Shell will each own a 25% stake, and in which state National Iranian Gas Export Co. (Nigec) will hold 50%. Persian LNG will build and operate the LNG facilities, including gas treatment, liquefaction, storage and loading facilities. The terms of that transaction will be part of the midstream shareholders' agreement, which has yet to be finalized.