National Iranian Oil Co, Malaysia SKS Sign Gas Deal

TEHRAN Jan 07, 2007 (Dow Jones Newswires)

The National Iranian Oil Co. (NIOC) on Sunday signed a $20 billion memorandum of understanding based on the buyback plan with Malaysia's SKS Ventures on the development of the offshore Golshan and Ferdows gas fields in the Persian Gulf.

Both gas fields are southeast of the Iranian Persian Gulf province of Bushehr.

The Golshan gas field, 65 kilometers from the Iranian coast with an estimated in-place reserve of 50 trillion cubic feet, will have a daily production of 70 million cubic meters when in commission.

The Ferdows gas field stands 85 km from the shore with an estimated 10 trillion cubic feet of in-place reserve, will have a daily production of 25 million cubic meters when in commission.

The Malaysian company will have one year to prepare the master development plans for the fields after which the two companies will sign a contract.

According to the NIOC Managing Director, Gholam-Hussein Nozari, there will be a $5 billion investment in the upstream sector, a $10 billion in the downstream sector and another $5 billion investment for the transportation of the liquefied natural gas from the two fields.

The Malaysian company will develop the gas fields in four phases with an annual LNG production of 20 million metric tons; it will be responsible for the marketing of half of this amount. The balance will be passed to the NIOC.

Nozari said subsequent to the signing of an agreement earlier this month with a Chinese company on the development of the offshore North Pars gas field in the Persian Gulf on the basis of a combination of the buyback and partnership, foreign companies are showing more interest to take part in the development of the country's oil and gas fields.

Iran is suffering from the lack of capital and technology as a result of the U.S. sanctions in place against the Iranian hydrocarbon industry that bans international oil companies from participating in Iranian oil projects.

Because of that it is moving towards other emerging countries to attract capital to the oil sector.

Iranian Oil Minister Kazem Vaziri Hamaneh said the development of the above gas fields will deepen cooperation between the two countries in the oil sector particularly in the wake of their ongoing joint plan to construct a refinery in the southeast Asian country.

Copyright (c) 2007 Dow Jones & Company, Inc.

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