Reuters: Asia can provide the finance Iran needs to develop its oil and gas reserves, the world's second largest, limiting the impact of U.S. sanctions and pressure, a top Iranian oil official said on Thursday.
By Simon Webb
TEHRAN (Reuters) – Asia can provide the finance Iran needs to develop its oil and gas reserves, the world's second largest, limiting the impact of U.S. sanctions and pressure, a top Iranian oil official said on Thursday.
"The financial world is not just in the western hemisphere," Hojjatollah Ghanimifard, vice president for investment affairs at Iran's state oil company NIOC, told Reuters in an interview.
"Iran's call on international financing for oil and gas can easily be moved to the east from the west."
State-run Asian companies keen to secure future energy supplies have resisted pressure from the United States to stay away from the world's fourth-largest oil exporter Iran.
The U.S. has sought to isolate Iran over its nuclear programme, which Tehran says is to generate electricity. The U.S. has imposed sanctions on Iran's oil and gas sector for over a decade. More recently, it has put pressure on international banks not to finance deals in Iran.
"This kind of pressure from the United States is nothing new," Ghanimifard said. "Just the tactics are different. The policy is the same. We have learned to live without U.S. technology, help and money. How easily we have been able to find new partners."
Iran is negotiating an exploration deal with Asian oil companies for two oil and gas blocks in the Caspian Sea, he said, declining to say which companies were involved.
A study had shown that Iran's Caspian region contains an estimated 21 billion barrels of oil and gas equivalent, he said.
The deal could take the form of a production sharing contract (PSC), if Iran's parliament and authorities agreed that model of contract was the best for the high-cost Caspian, he added.
Iranian law forbids foreign investment in Iran's upstream energy sector, but exceptions could be granted, Ghanimifard said.
Foreign companies working in the sector have done so on the basis of buy-back deals, under which they receive a share of output for a brief period as repayment for investment. Oil companies prefer PSCs, which give them a long-term share of output and allow them to book reserves.
Iran has several other deals pending with Asian oil and gas companies.
Ghanimifard said there should be news "in a few weeks" on deals for China's state-backed offshore oil company CNOOC India's Oil and Natural Gas Corporation. He declined to elaborate.
CNOOC is in talks for a $16 billion deal to develop the North Pars gas field and to build a liquefied natural gas (LNG) export terminal for the fuel.
ONGC is awaiting the nod from Iran for a $3 billion proposal to develop gas output from the Fars oil and gas block.
The oil prices would likely continue to fall for several months more before resuming its long-term upward trend based on rising demand from emerging economies, Ghanimifard said.
"The fall comes after the unreasonable rise in July," he said. "But if what we see in China, India and other Asian countries in terms of demand growth continues, the trend will be up."
U.S. oil has fallen $32 from its peak over $147 a barrel in July as record fuel prices and a slowing economy have cut demand in the U.S., the world's largest energy consumer.