China’s Sinopec, Iran sign agreement on developing Yadavaran oilfield

China’s biggest refiner, Sinopec, and Iran have signed a $2 billion agreement on developing the Yadavaran oil field, on Tuesday, firming Beijing’s business links with Tehran despite global sanctions over Iran’s peaceful nuclear program.

The long-awaited agreement signed in Tehran completes a 2004 memorandum of understanding for state-owned Sinopec Group to help develop the huge oilfield. Iran’s oil minister, Gholam Hossein Nozari, praised the deal as a vindication of his country’s efforts to counter pressures to isolate the country over its nuclear program.

“Various companies are continuing to invest in Iran and that we are witnessing the full presence of foreign investments in the country,” the Iranian radio network Voice of the Islamic Republic of Iran, quoted Nozari as saying. “The other message this contract has is that if other countries intend to invest in our major oil and gas fields, they should not waste time, otherwise they will surely lose investment opportunities in Iran,” he said. Nozari estimated the cost of the project at $2 billion, the official Xinhua news agency reported.

Zhou Baixiu, head of Sinopec’s International Exploration and Production Unit, and Hossein Noqreka-Shirazi, head of international affairs for the Iranian Petroleum Ministry, signed the agreement, the reports said. Sinopec’s publicly traded unit, China Petroleum and Chemical Co., has shares traded in New York, London, Hong Kong and Shanghai.

The Chinese company appeared to be seeking to keep the agreement low key. It did not make any official announcement of the deal. China has been snapping up energy resources across the globe as it seeks to ensure supplies of oil and gas to fuel its booming economy.

Beijing has steadfastly balked at U.S. demands for new United Nations sanctions against Iran over its nuclear program, arguing for diplomatic solutions to the standoff over whether it is developing atomic weapons. Iranian news reports said the lengthy delay in an agreement on developing Yadavaran was due to commercial issues, not the nuclear controversy. The Yadavaran deal calls for the Chinese company to invest in developing the oilfield in two phases, with the first phase to produce 85,000 barrels per day to be carried out in four years.

The second phase, to produce an additional 100,000 barrels per day, is to be completed in another three years, Xinhua said, citing Nozari. Earlier reports had said the two sides were divided over Sinopec’s request for a 15 percent return from the project and over the planned capacity for the project.

China had argued for a target of 180,000 barrels a day to avoid excess production, according to Chinese state media reports. The Yadavaran field is expected to have a potential output of 300,000 barrels per day of crude oil. It has 3.2 billion barrels of recoverable reserves, with recoverable gas reserves estimated at 2.7 trillion cubic feet or 80 billion cubic meters.

Anti-Iran resolutions not affecting Iran-China gas deals

TEHRAN (IRNA) -- Adoption of anti-Iran resolutions by the United Nations Security Council had no influence on gas deals between Iran and China, a senior official at Oil Ministry said on Tuesday.

Deputy Oil Minister Ali Kordan told reporters that there was no indication from the Chinese side for reviewing its previously signed agreements with Iran following the UN's latest anti-Iran resolution. On March 3, the United Nations adopted a third resolution (1803) against Iran for its peaceful nuclear activities under vigorous pressure from Western states, the U.S. in particular.

The council has previously adopted two other resolutions against Iran in December 2006 and March 2007. Iran said that the resolution would have no impact on the country as it lacked legitimacy for ignoring the latest report of the International Atomic Energy Agency Director General Mohamed ElBaradei on Iran on February 22. The 11-page report verified Tehran's non-diversion from its civilian nuclear program. ""Chinese companies involved in gas deals with Iran, particularly in the North Pars gas field and in production of liquified natural gas (LNG) projects, have not yet signaled to review their previously signed agreements with Iran or being reluctant to continue with their activities in the country,"" he said. Kordan added that Tehran and Beijing have held talks for carrying out joint projects to establish refineries in Iran and Indonesia in the future.

Iran Strikes New Azadegan Oil Find

TEHRAN (FNA)- Iran has discovered a new oil layer holding a potential 2.2 billion barrels of oil in the Azadegan oil field

National Iranian Oil Company's (NIOC) director for exploration, Mahmoud Mohaddes, said that the new layer was discovered during drilling of the seventh exploration well at the field. Iran is planning to develop another oil layer with a capacity of one billion barrels, which had been previously discovered in the Azadegan oilfield, he added. The Azadegan oilfield, which is located 80 kilometers west of the southern Iranian city of Ahvaz in oil-rich Khuzestan Province, has proven oil reserves of 33 billion barrels, with good prospects for additional capacity, taking the total to 40 billion barrels.

The field is being developed by the PetroIran Development Company, a subsidiary of NIOC. Russia's Lukoil and India's Reliance Industries are currently in talks to buy stakes in the field. Lukoil entered talks after the collapse of a previous bid to develop the field by a joint venture of Japan's Inpex and the state-run oil firm in October 2006. Reliance is thought to have started negotiations in late 2007.

Iran loses patience with Shell's indecision

Shell has been warned by Iran that it must commit itself to developing a $10bn (£5bn) gas field in the turbulent Middle East country by June or risk the project being handed over to a rival.
Europe's largest oil and gas company has delayed making a final decision on the grounds of soaring costs but also in the knowledge that a decisive move would put it in political conflict with Washington at a time of mounting tension over Tehran's uranium enrichment programme.
Shell's British competitor, BP, said three years ago that it would not pursue business in Iran, claiming it was politically "not a flyer".

Iran's oil minister, Gholam Hossein Nozari, has been losing patience with Shell - and Total of France - over deals to develop phases 11 and 13 of the huge South Pars field, and this week issued an ultimatum.

"The deadline we have given to Total and Shell is June and it is the last chance we are giving them," Nozari said, adding that Tehran "will definitely make the final decision" after the deadline.

Officials in Iran said negotiations with a number of Asian companies had already started and that they were likely to replace Shell and Total if the two continued to prevaricate. There has already been speculation that Gazprom of Russia is keen to muscle in on the deal, while Sinopec of China has signed a $2bn contract to develop the Yadavaran oilfield.

Jeroen van der Veer, the chief executive of Shell, was expected to meet Nozari on the sidelines of an International Energy Forum meeting, which both were attending in Rome yesterday. "We will be discussing some projects with some companies," Nozari said.

Shell was unavailable for comment last night but has said previously that it would not decide until the end of this year due to the difficult investment environment, where construction costs and the falling dollar were causing havoc with planning.

The group has refused to discuss the backlash any such move might produce in Washington. President George Bush is putting pressure on companies not to do business with Iran because of its nuclear programme, which has brought relations between Washington and Tehran to a new low. The two sides have also been trading insults over US allegations that Iran is supporting insurgents in Iraq.

Shell had been hoping that a change in the US presidency would open the way for oil companies to pursue a deeper involvement in Iran. However, relations between the Tehran government and Shell and Total are getting worse.

In February, Total's boss, Christophe de Margerie, said: "We have not burnt our bridges with Iran. We will find solutions to maintain our long-term presence."

Iran to Shell: Move it or lose it

Iran told Shell it must commit itself to developing a $10 billion (£5 billion) gas field in the country by June or risk the project going to a rival.

The Guardian reported Europe’s largest oil and gas company has delayed making a final decision on the grounds of soaring costs but also in the knowledge that a decisive move would put it in political conflict with Washington at a time of mounting tension over Tehran’s uranium enrichment program.

Shell’s British competitor, BP, said three years ago it would not pursue business in Iran.
Iran’s oil minister has been losing patience with Shell and Total of France over deals to develop phases 11 and 13 of the huge South Pars field, and this week issued an ultimatum.

Negotiations with a number of Asian companies have already started, and they are likely to replace Shell and Total if the two continue to prevaricate.

There has already been speculation that Gazprom of Russia is keen to muscle in on the deal, while Sinopec of China has signed a $2 billion contract to develop the Yadavaran oilfield.