TEHRAN (FNA)- Iran said on Wednesday a June deadline would be the last chance for France’s Total and Royal Dutch Shell to finalize deals on developing two major oil and gas assets in the Persian Gulf.
After protracted talks, Iran urged Total and Shell in October to finalize their deals on the giant South Pars gas project by mid-2008 or lose the contracts, after the two oil firms had delayed investment allegedly due to soaring costs.
“The deadline we have given to Total and Shell is June and it is the last chance we are giving them,” Oil Minister Gholam Hossein Nozari said, adding Tehran “will definitely make the final decision” after the deadline.
Another senior oil official earlier this week said negotiations with a number of Asian companies had already started and that they were likely to replace Total and Shell.
Tehran, facing mounting pressure from the West to abandon its nuclear rights, is seeking to attract foreign investors to help it develop its huge gas and oil reserves.
Iran, with the world’s second largest gas reserves after Russia, had previously warned the French energy major not to bow to political pressure to steer clear of the Islamic Republic.
Industry experts say many Western firms are losing reluctance to invest or expand work in Iran while Asian firms including from China have been signing up to energy projects.
Norwegian energy group StatoilHydro said on Tuesday it has planned for a long-term presence in Iran as the country holds huge oil and gas reserves.
“Our main objective is to fulfill our commitments pertaining to phases six, seven and eight of the South Pars gas development projects, Anaran and Khorramabad perfectly and then take into consideration results (of the projects),” press tv quoted Jan Helge Skogen, Statoilhydro’s managing director in Iran, as saying.
“We seek long-term presence in Iran since Iran possesses massive oil and gas reserves, but at present, we are focusing on StatoilHydro’s three current projects and we are ready to mull over new investments,” he added.
Statoilhydro, formed on Oct. 1 when Statoil completed its takeover of oil and gas operations from Norsk Hydro, will take part in the 13th International Oil, Gas and Petrochemical Exhibition, slated for April 16 to 20 in Tehran.
According to the StatoilHydro, the company is an offshore operator for development of phases six to eight of the South Pars gas field. The company agreed to conduct a seismic survey during 2007 and to drill exploration wells over a four-year period in addition to gathering additional seismic data in Khoramabad.
Oil giant Total also stressed last week that the French company cannot afford to lose deals with Iran as it is one of the largest oil producers in the world.
In an interview published on Thursday, Total’s Chief Executive, Christophe de Margerie, told Liberation, “Iran is one of the largest oil-producing countries in the world. And in terms of gas, we are far from having made all the discoveries possible. We cannot afford to be absent.”
De Margerie explained that despite the global political situations, oil and gas are not “stop and go” industries with investments covering 20 to 30 year periods. He cited Libya as an example: “It was difficult at times. If we had left, there would never be an income.”
“There is a general decline in oilfields. If we don’t move we’re heading for a real problem. And the decision makers, who have environmental problems in mind, seem to forget the question of access to energy,” he warned.
The Total Chief Executive Officer also said in February, “We have not burnt our bridges with Iran … We will find solutions to maintain our long-term presence.”
American oil companies have also displayed eagerness to attend in Iranian projects.
As a first step several US oil companies have participated in the 13th International Oil, Gas and Petrochemical Exhibition (IOGPE) in Tehran, which started on Wednesday.
A total of 860 domestic companies and 505 foreign companies are participating in the IOGPE, including companies from the US, England, Japan and Canada, Exhibition Manager Mohsen Aghajani told the media here on Tuesday.
“Coinciding with the 100th birthday anniversary of the oil industry in Iran, the five-day exhibition is planned to open on April 16,” added Aghajani.
Analysts believe that participation of foreign companies from 30 countries is proving their opposition to the US sanctions. Iranian officials also share the same view.
“This indicated that they are disregarding pressures imposed by the world powers to isolate Iran from economic arenas,” Iranian Deputy Minister for Oil Sekhavat Asadi told Iran’s Petroenergy Information Network (PIN).
“It is important first of all from the [oil] industry point of view, because with more than 4 million bpd, Iran is an oil-producing country which cannot be dismissed by any company – sellers of equipment, sellers of services and so on,” Dr. Manouchehr Takin, a senior petroleum upstream analyst with the Centre for Global Energy Studies in London, told The Media Line.
“From the political point of view, I think the fact that politics has not hindered or stopped the exhibition is a significant point. This means that business takes priority over politics,” added Takin.
According to the US Department of the Treasury’s Office of Foreign Assets Control, it is forbidden for “US persons to trade in Iranian oil or petroleum products refined in Iran.”
Americans are also not allowed to finance such trading, and they “may not perform services, including financing services, or supply goods or technology, that would benefit the Iranian oil industry.”