Venezuela, Iran Ink Oil Invest Deals for South Pars, Dokobuki Field

LONDON (Dow Jones Newswires), Sept. 8, 2009

Iran and Venezuela signed three oil deals Sunday during a Venezuelan presidential visit as the Islamic republic tries to mitigate the risk of new sanctions, Iranian news agencies said Monday.

The accords were signed as Tehran is coming under increased international pressure over its nuclear program, including a threat to enforce sanctions against import products to Iran.

The semi-official Mehr news agency said on Monday that Iran and Venezuela signed three memorandums of understanding in the energy sector in Tehran on Sunday as part of a visit to the country by Venezuelan President Hugo Chavez. They include two agreements of reciprocal investments in Iran and Venezuela each worth $760 million, according to Mehr and Shana, Iran's Oil Ministry news agency.

Under the first deal, state oil company Petroleos de Venezuela SA, or PDVSA, will invest $760 million as part of its 10% stake in Iran's South Pars phase 12, the agencies said. State-owned Iranian company Petropars is the operator of the project.

The agencies also said Iran committed to invest the same amount in Venezuela's Dokobuki oil field, through Petropars' 20% stake in the project, as well as the development of Block 7 of the Ayacucho oil field.

Under a third memorandum of understanding, Tehran will import 20,000 barrels a day of gasoline from Venezuela, worth $800 million, as of October.

The Mehr news agency quoted Iran's newly appointed oil minister as saying that, "According to the signed agreement, Venezuela will provide Iran with gasoline in case of sanctions."

U.S. lawmakers are soon due to vote on new sanctions specifically targeting Iran's refined petroleum imports, on which the Islamic Republic relies for 40% of its domestic consumption.

The legislation, which come on top of existing sanctions against foreign investment in Iranian fields, would be a response to Iran's nuclear program, which the West suspects is designed to produce nuclear weapons. Tehran denies that, but instead defends its right to meet civilian energy needs through nuclear power.

The Venezuela fuel accords complement a wider plan to develop Iran's domestic refining sector. Last month, President Mahmoud Ahmadinejad said Iran plans to complete the Persian Gulf Star refinery within the next two years as part of necessary measures to cope with possible sanctions.  

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