Iran steps up gas field pressure on foreign firms, warns expulsion Oil min acknowledges ‘liquidity shortage’

TEHRAN, May 8, (Agencies): Oil Minister Masoud Mirkazemi threatened on Saturday that Iran would kick out foreign firms for delaying the development of its massive South Pars gas field and replace them with domestic companies. Mirkazemi did not name any foreign company, but his threat comes just days after Iran’s elite Revolutionary Guards Corps boasted that it could take over projects from Western firms such as Total and Shell in South Pars. “We have recently told some foreign firms which have delayed (development of) some phases (in South Pars) for several years, that we would not negotiate with them and domestic firms will be given these projects to implement,” Mirkazemi was quoted as saying by Mehr news agency. Several foreign companies have stopped making new investments in Iran’s energy sector amid Western pressure for new sanctions against Tehran because it continues to pursue its controversial nuclear programme. Iran is OPEC’s second largest crude oil exporter and also holds one of the largest gas reserves in the world. It has planned a massive 200-billion-dollar investment in the energy sector over a five-year period to 2015.

Mirkazemi said on Saturday, without elaborating, that the Islamic republic was facing “shortage of funds for implementing various projects.”
Iran has already started issuing bonds to raise funds for these projects, and last month a top official with the state-owned National Iranian Oil Company said it will issue five billion euros worth of bonds in the next Iranian year starting March 21, 2011.
He said three billion euros of the money raised from the issue will be used to develop South Pars.
The Guards boasted last month that the corps can take over Iranian energy sector projects if Western firms pull out.
Brigadier General Yadollah Javani, who heads the Guards’ political bureau, played down the impact of Western sanctions, saying: “The Revolutionary Guards are proud to declare that they have the ability and know-how to easily replace large foreign companies.

“For example, we can take up big projects in (the southern port and energy hub of) Assalouyeh and replace Total and Shell.”
The Guards’ presence in Iran’s economy has risen under the presidency of hardliner Mahmoud Ahmadinejad, even as the United States and European Union target the body for “weapons proliferation” amid accusations it is involved in Tehran’s nuclear programme.
China, which continues to reject the imposition of new sanctions on Tehran, has emerged as one of the main investors in the Iranian energy sector.
Ali Vakili, head of the state Pars Oil and Gas Company, said it would soon sign contracts with Iranian companies on the development of South Pars phases 19, 22-24, 27 and 28.
“We will not wait for foreign companies ... Iranian firms possess the necessary capability for the implementation of the South Pars gas field projects from start to end,” the Oil Ministry website SHANA quoted him as saying.

Mirkazemi reiterated that Iran needed to invest $200 billion in its all-important energy sector in the 2010-15 period, but suggested it currently faced a shortage of funds.
Analysts say Iran, which has started issuing bonds to help fund South Pars projects, needs to attract foreign capital to help expand and modernise its oil and gas industries.
“Upon the realization of this level of investment there will be a considerable leap forward in the development of the oil industry in Iran,” Mirkazemi said, referring to the 5-year plan.
But, he added: “We are currently facing a liquidity shortage for the implementation of various projects.”
Many foreign countries are investing in South Pars, which Iran shares with Qatar, but U.S. and U.N. sanctions have caused Western companies to treat Iran with caution, sometimes to the benefit of operators from other parts of the world.
China’s National Petroleum Corporation (CNPC) has clinched a $4.7 billion deal to develop part of South Pars, supplanting Total as lead partner in the project after the French firm delayed its investment decision under political pressure.

Iran has the world’s second largest gas reserves but has no major net exports, partly because sanctions have hindered access to Western technology and funding.
Repsol and Shell signed a service contract for the Persian LNG project in 2007, setting out the conditions for exploration and development operations in Phases 13 and 14 of South Pars.
The project covers development of production and exports of liquefied natural gas from a part of the field.
In 2008, Shell delayed decisions on multi-billion dollar investments in Iranian LNG plans due to political tension.
LNG is gas cooled to liquid under pressure for transportation in special tankers.

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