Iran Official: In Talks with Petrobras on Caspian Oil Blocks

PARIS, Jun 04, 2007 (Dow Jones Newswires)

Iran is in advanced talks with Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, to help the Islamic Republic undertake the first exploration of its deep offshore Caspian Sea waters, a senior official from the National Iranian Oil Co. said Friday.

A deal with Petrobras to develop a pair of oil blocks in the Caspian could be reached this summer and may eventually require $2 billion of investment to develop, Seyed Mahmoud Mohaddes, director of exploration at the NIOC, told Dow Jones Newswires in an interview.

"We've been in exclusive talks with Petrobras for some time. This would be our first entry in exploring our part of the Caspian," Mohaddes said.

An agreement would tap Petrobras' expertise in deep offshore drilling technology and widen the company's footprint in Iran, where it has already begun to explore one oil block.

An agreement would also further test U.S. President George W. Bush's policy of trying to persuade international oil companies not to do business with Iran, which needs foreign oil company know-how and technology to develop its hydrocarbons in the coming years.

The Bush Administration has sought to prevent oil companies from investing in Iran because of an ongoing dispute over Iran's nuclear program.

A handful of companies, including French oil giant Total SA (TOT), that have planned Iranian investments as well as operations in the U.S., been warned by the U.S. that they could violate U.S. law.

Iran's Mohaddes said it had identified three well sites in the two blocks, with each one costing some $150 million to set up. Petrobras may partner with other companies to develop the sites, he added.

Elsewhere, Mohaddes said the deadline for bids on 12 onshore blocks and five offshore blocks formally offered in February had been put back to Aug. 1 from June 20, citing the impact of the Iranian New Year holiday in March that shut the oil ministry for three weeks.

He said 23 foreign oil companies, including some with existing operations inside Iran, had sought to review the data on the blocks, which he said would require a minimal investment of $500 million in total. He gave no further details.

Companies including China Petroleum & Chemical Corp. (SNP), or Sinopec, Norway's Statoil ASA (STO), Royal Dutch Shell PLC (RDSA), Italy's Eni SpA (E), Total SA (TOT), Russia's Lukoil (LKOH.RS) and Austria's OMV AG (OMV.VI) attended a formal presentation of the blocks in Vienna in February.

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