Iran to Offer Up to 24 Oil Blocks in January

Dow Jones Newswires

LONDON, Nov 17, 2006 (Dow Jones Newsires)

Nervous of losing market share to fellow members of the Organization of Petroleum Exporting Countries, Iran is to offer a bevy of oil exploration projects to foreign companies early in 2007 in a bid to quickly pump extra barrels, Iranian political and industry sources told Dow Jones Newswires this week.

The initiative which will see up to 24 offshore and onshore oil blocks on offer, comes as the U.S. continues to press foreigners to not do business with the Islamic republic because of its nuclear ambitions.

"The oil ministry is planning to offer the blocks to both foreign and local investors from early 2007," an Iranian political source told Dow Jones Friday.

The source said Iranian President Mahmoud Ahmadinejad supports the initiative.

Iranian Oil Ministry officials also said a package is being prepared so that the blocks can be offered to investors at an international conference, scheduled to take place in Vienna late January.

No details have yet been disclosed on which blocks will be offered, their potential size or their value.

However, one Iranian diplomat, specializing in his countries' energy affairs, said some of the blocks could include those initially offered to foreign firms in a bidding round in January 2004. A number of those projects weren't awarded because of a lack of interest from international energy companies.

Iran has the world's third-largest proven oil reserves and second-largest natural-gas reserves. But the country's standoff with the U.S. and Europe over the nuclear program and its government's anti-Western rhetoric have intensified nervousness among foreign firms about investing there.

But Iranian concern about losing the country's number two slot in OPEC, after Saudi Arabia, is making officials realize that they have no time to waste on courting foreign companies.

Today, Iran is pumping almost flat out at close to 4 million b/d. Production at many Iranian oil fields is on the decline because sanctions have prevented the Islamic republic from accessing foreign capital and technology.

Iranian officials have however, sought to allay Western worries about investing in their country by saying that the projects will give foreign partners the kind of lucrative contracts they are seeking.

Copyright (c) 2006 Dow Jones & Company, Inc.