Oil Buy-Back Contracts
Gas Buy-Back Contracts
Iran aims to conclude officially the first of a new wave of buy-back deals in its oil sector in October 2001.
The Iranian oil minister, Bijan Namdar Zanganeh, stated that Iran was initially set to sign the deal to redevelop the offshore Foroozan-Esfandyar field back in July 2001. According to the deal, Australian energy and mining group BHP Billiton and Iranian partner Petco aim to triple output from this field to 150,000 barrels per day.
Since BHP joined Petco, the negotiations took longer than expected. Petco won the original tender for the offshore fields. Mr Mirmoezi, deputy oil minister for production affairs, has stated that the contract does not enjoy the same enhanced terms involving a risk-reward element based on production guarantees that are now being incoporated in other agreements. It was previously expected that the contract would follow the new terms on production guarantees.
The Azadegan oil field is the next multi-billion dollar deal to be signed, although no timetable has yet been given. Discussions on the technical phase must first be finished before moving on to the contractual and commercial terms.
The finalization of phases 9 and 10 of the South Pars gas field, originally expected in August 2001, will not happen before new documents from the bidders are examined, Zanganeh stated on September 27 2001. The bidders for offshore gas phases 9 and 10 had requested additional time to complete their proposals. LG Corp of South Korea and France's Technip are among the bidders. The deal could be finalized by December 2001.
The contracts on phases 11 and 12 of South Pars were pending negotiations with potential partners such as Eni and TotalFinaElf to build a liquefied natural gas plant. Negotiations are also continuing on bids from Malaysia's Petronas, BP, India's Reliance and Spain's Repsol.
Iran has said that each of phases 9 to 12 will require an investment of some $1 billion, and are estimated to hold at least 310 trillion cubic feet of gas.
For further information on this topic please contact Behrooz Akhlaghi at International Law Office Dr Behrooz Akhlaghi and Associates by telephone (+98 21 873 21 38) or by fax (+98 21 873 41 29) or by e-mail ([email protected]).
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