<http://www.ft.com/cms/s/3732511a-9059-11db-a4b9-0000779e2340.html> Iran admits oil projects suffering
By Najmeh Bozorgmehr in Tehran and Roula Khalaf in London
Published: December 20 2006 19:00 | Last updated: December 20 2006 23:10
Iran's oil minister on Wednesday admitted that Tehran was having trouble financing oil projects, in a rare acknowledgment of the economic cost of its nuclear dispute.
"Currently, overseas banks and financiers have decreased their co-operation," Kazem Vaziri-Hamaneh told the oil ministry news agency, Shana.
The statement underlined the impact of de facto financial sanctions on the Organisation of the Petroleum Exporting Countries' second biggest oil producer. As the controversy over Iran's nuclear programme has escalated, the US has applied pressure on European banks and financial institutions to curb dealings with Tehran.
The fact that the UN Security Council could soon impose the first – even if mild – sanctions against Iran has compounded the political uncertainty and risks of doing business with Tehran. Iranian officials insist there is international interest in investing in Iran's oil industry and European executives play down any impact on companies seeking deals in Iran.
The National Iranian Oil Company has signed a memorandum of understanding with China's CNOOC to develop the North Pars gas field. The memorandum, if it turns into a final deal, would bring $16bn worth of Chinese investments for the initial part of any deal, the semi-official Fars news agency reported on Wednesday.
But western officials hope the financial squeeze's effect on the oil industry, the backbone of Iran's economy, will help raise domestic pressure for a change of policy and persuade the regime to heed international calls for a suspension of its uranium enrichment programme.
Iran's oil production capacity, at 4.3m barrels per day, is set to reach 5m bpd, according to the country's latest five-year plan, which closes in 2009. This would involve $16bn of investment in the sector. But the International Energy Agency reckons that Iran's longer term plans to lift oil production to 6.8m bpd by 2030 would require nearly $80bn in investment, with expansion plans for the gas industry requiring an extra $85bn.
"There's a growing awareness that de facto sanctions are beginning to hurt and everyone understands the future of the economy depends on the development of oil and gas," said a western diplomat. "Banks are not lending, partly because of US pressure, but the banks are also drawing their own conclusions."
Mr Vaziri-Hamaneh said projects would be financed from the Oil Stabilisation Fund, which accumulates oil windfalls to promote the private sector and save for periods of low oil prices.
Additional reporting by Javier Blas in London
<http://www.msnbc.msn.com/id/16286763/> Total faces investigation over $2bn Iran contract By Martin Arnold in Paris Financial Times Updated: 1:11 a.m. ET Dec 20, 2006
A Paris judge has launched an investigation into allegations that Total, the French oil and gas group, paid bribes to win a $2bn gascontract in Iran almost a decade ago.
The move is a further blow for Christophe de Margerie, Total's head of exploration and production, who was involved in negotiating the Iranian South Pars contract and is due to take over as chief executive in February.
Mr de Margerie, head of Total's Middle East activities from 1995 to 1999, is facing separate charges over allegations that he was involved in corruption during the scandal-plagued UN oil-for-food programme in Iraq.
The latest investigation stems from the discovery of SFr100m ($82m) in two Swiss bank accounts, allegedly paid by Total to an Iranian intermediary to help the French company's consortium win the South Pars contract. The money has been frozen.
A French judicial official told the Financial Times that Switzerland had dropped its money laundering inquiry into the affair and passed evidence to the Paris prosecutor. Total declined to comment.
One of the judges charged with the new investigation, Philippe Courroye, is also running the investigation into Mr de Margerie over the oil-for-food corruption case. The move is a further setback for the image of France's biggest company, which has a market capitalisation of more than €130bn ($171bn) and 95,000 staff. Yet investors seemed relatively sanguine about the news, and Total shares fell 50 cents to €54.50.
Mr de Margerie is due to succeed Thierry Desmarest as chief executive when the latter steps up to be chairman after the group's annual results in February.
Known as "Big Moustache" for his grey handlebar moustache, the 55-year-old expert on the Gulf region's oil sector has denied all charges of corruption in the oil-for-food scandal.
Total won the South Pars contract in 1997 as part of an international consortium, including Russia's Gazprom, Malaysia's Petronas and Iran's state-owned NIOC.
The French group has been in Iran since the 1950s, though recently it resisted pressure from the US to isolate the Islamic state over its controversial nuclear enrichment programme.
Total gave its 40 per cent stake in the South Pars project back to NIOC in2004 under the terms of the deal. But it still has rights to a share of production from the gas field, equivalent to 18,000 barrels this year, below 1 per cent of its global production.
The French fraud squad raided Total's headquarters in March on behalf of Swiss authorities in relation to the bribery case. But Total and the French government prevented the findings of the search from being used for "national interest" reasons.
-- Yoshie <http://montages.blogspot.com/> <http://mrzine.org> <http://monthlyreview.org/>