Iran oilfields need $100 bln to hit capacity target http://www.reuters.com/article/companyNewsAndPR/idUSN2720557520070527
Sun May 27, 2007
TEHRAN, May 27 (Reuters) - Iran's oilfields need at least $100 billion worth of foreign investment over the next decade to boost output by 1 million barrels per day (bpd) to 5 million bpd, a senior Iranian oil official said on Sunday.
Extensive exploration, further development of Iran's oilfields and increasing recovery rates via advanced technology are a must if the country is to hit its capacity target, said Abdollmohammad Delparish, planning manager at the National Iranian Oil Company (NIOC).
"For this goal we need partnership with foreign companies -- and the $100 billion is a very conservative estimate," he said. "Internal investment will only cover a quarter of our financial needs."
The investment projection comes at a time when the United States is seeking to squeeze OPEC's second-biggest producer over its nuclear program. Washington is pressuring foreign companies to steer clear of the Islamic Republic.
Other Iranian officials downplayed the need for outside help in the country that pumps about 4 million bpd. Iran was cranking out 6 million bpd before the 1979 Islamic Revolution, rates that proved unsustainable.
"There's no capital shortage in NIOC," said Deputy Oil Minister Mohammad Reza Nematzadeh. "We need a little more courage and a little less procedure to spend our future capital."
Potential investors said they were prepared to strike deals with Iran, home to the world's second-biggest oil and gas reserves, provided commercial terms were right and political tensions had eased.
Foreign companies often complain about the terms of Iran's so-called buy back deals that they say are not particularly generous. NIOC has sweetened the terms, but executives say Tehran has not gone far enough.
Under the buy-back plan, companies hand over operations of fields to NIOC after development and then receive payment from oil or gas production for a few years to cover their investment.
"Iran is its own worst enemy. International oil companies are willing to invest if the conditions are right and they get a decent rate of return," said Mehdi Varzi, president of consultant Varzi Energy in London. But political pressure is now making some major European companies hesitate. Two European investors -- Total (TOTF.PA: Quote, Profile, Research and Royal Dutch Shell (RDSa.L: Quote, Profile, Research -- have signaled the standoff between the West and Iran over its disputed nuclear program could influence their new investment decisions.
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