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Iran to tender 17 buyback-based oil and gas contracts
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posted February 14, 2001 10:15
BBC Monitoring Service
Feb 13, 2001
Text of report in English by Iranian news agency IRNA
Tehran, 13 February: The Iranian Oil Ministry has decided to put seventeen oil and gas contracts on a buy-back basis to international tender in the upcoming months, a press report said Tuesday.
Jomhuri-ye Eslami quoted a deputy oil minister Hojjatollah Ghanimifard as saying that the tenders will include the giant oil field South Pars on the southern Persian Gulf waters.
"Buy-back is not a type of investment, but a means for providing financial requirements," he said.
Under Iran's controversial buy-back programme, foreign firms receive crude as compensation and profit in return for investing in projects under a formula that denies them a direct equity stake.
Last November, the Majlis Energy and Oil Commission said the committee would examine buy-back deals signed with foreign entities because of probable fraud.
The examination would include all buy-back deals signed between Iran and foreign investors since the victory of the revolution.
While international oil firms want sweeter terms, conservative politicians and officials in the Islamic Republic look at deeper foreign investment with suspicion and fear it could amount to selling out the country's most valuable resources to the West.
Buy-backs began in the mid-1990s in a bid to help the government skirt constitutional bans on foreign ventures and attract much-needed capital to revamp the ageing energy sector, badly damaged by the 1980s war against Iraq and US sanctions.
Shell last year won an 800 million dollars buyback deal to develop the Sorush and Nowruz offshore fields with the National Iranian Oil Company (NIOC) and is competing for a project to develop the giant Bangestan
Foreign firms have scoffed at Washington's D'Amato Law, which theoretically punishes companies that invest more than 20m dollars in Iran's energy sector but has been only half-heartedly enforced.
Iran has the second-largest natural gas and third largest oil reserves in the world. Oil is Iran's economic mainstay.
All times are PT (US)
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