Getting acreage in Iran wonآ’t be easy for India

Vol 8, PW 4 (19 May 04) Exploration & Production

India will find it difficult to add to its upstream portfolio in Iran.

Two months ago, Iran issued a tender for 16 exploration and production blocks. Most interest centres on a development opportunity at the Koush-Hosseinieh block where India, France, Russia and China are competing.

Iran plans to announce the winner in August or September this year. Central to Irans bid terms for the 16 blocks is a market for its natural gas of which it has nearly a fifth of the worlds reserves.

National Iranian Gas Export Company managing director Rokneddin Javadi tells PETROWATCH: It is a clear policy of the (Iran) government to sell natural gas or LNG by linkage with an oil block or a South Pars (gas) development phase. Javadi said Koush-Hosseinieh could produce 300,000 b/d.

Anyone offering us a long-term, reliable market for 5m t/y LNG will get 20% equity stake (60,000 b/d production) in Koush-Hosseinieh. But reluctance by India to accept the onerous terms of the gas or LNG buyback linkage to the upstream opportunity mean it has little chance.

During his visit to India in February, Javadi offered India one phase of the giant South Pars gasfield on nomination in exchange for a commitment to buy 5m t/y LNG. Weve had no response at all from India on this offer, Javadi tells this report.

This is because India wants to separate the upstream and gas or LNG opportunities in Iran, preferring to buy LNG through tender. But last year, in a departure from this policy, India showed interest in an Iranian proposal to choose one producing and one exploration upstream property from a list of five in exchange for 5m t/y LNG.

North Azadegan figured in the list of producing properties, but India wanted the more attractive South Azadegan field. Last November, Iran agreed, but talks broke down over terms.

In February this year, Japans Inpex Corporation signed a contract with Iran for 75% of South Azadegan. Tehran holds the rest through a subsidiary of state-owned National Iranian Oil Company.

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