Iran backtracks on South Azadegan offer to OVL

Vol 7, PW 23 (11 Feb 04) People & Policy

Indias plans to expand its presence in Irans oil exploration sector have hit a roadblock.

In dispute is development of a portion of the giant onshore Azadegan field, which is believed to hold 25bn barrels of oil. Iran had earlier offered to award India North Azadegan (a development property) and a second exploration property without going to tender in return for an Indian commitment to buy 5m t/y natural gas or LNG from Iran over 20 years.

But Indian officials now accuse Iran of breaking its promise over Azadegan. Matters have reached such a stalemate that theres been no communication between both sides over this issue for the past month or so.

A source familiar with these negotiations tells PETROWATCH: The Iranians had originally offered North Azadegan, but we said we wanted the more prospective South Azadegan. In November they agreed to give us 40% stake in South Azadegan alongside a western oil company.

We are told that shortly after this offer Iran inexplicably backed out and decided to invite bids for South Azadegan. The Iranians began talking to Shell, Statoil and other companies about a bidding process, says our source.

We were very surprised by this reversal in their position but we decided to go along and take part in the bidding process as well. Since then, theres been no movement.

Nothing has happened, he adds. We now hear they are talking to Japan National Oil Company again.

Its becoming clear to us that the original Iranian offer on Azadegan to us no longer stands. If that wasnt bad enough, India is also unhappy with the terms that Iran is offering to anybody willing to develop South Azadegan.

See below.

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