Nuclear dispute not affecting Iran talks with IOCs: oil minister

Vienna (Platts)--8Mar2006

The ongoing dispute between Iran and the international community over
Tehran's controversial nuclear program is not affecting relations with
international oil companies interesting in developing the country's oil and
gas reserves, oil minister Kazem Vaziri-Hamaneh said Wednesday.

     "We are signing contracts and there is no reason not to do so," the
minister told reporters on the sidelines of OPEC talks in Vienna.

     Current production capacity is 4.2 million b/d, he said, adding: "By the
end of the program it is going to get to 5.2 [million b/d]."

     Asked to comment on the status of talks to involve China in the
development of the Yadaveran onshore oil field, Vaziri-Hamaneh said:
"Negotiations are ongoing and I hope it will not go for long."

     A preliminary agreement between Iran and China envisaged the export of
10-mil a year of Iranian LNG to China over a 25-year period. It also offered a
stake in Yadavaran onshore oil field to Sinopec, which was given the right to
buy 150,000 b/d of Yadavaran output once peak output is achieved. Although it
expired in January, both countries have said the deal remains on the table.

     Iran is pinning its hopes of boosting its oil production, which some
analysts believe is currently strapped at around 4-mil b/d, on fields like
Yadaveran and another onshore giant, Azadegan, which have yet to come into
production.

     NIOC and Japan's Inpex agreed in February 2004 to a 75:25 partnership to
develop the giant onshore field Azadegan, which at the time came with a $2-bil
price tag. Total investment for developing the giant discovery has since risen
to $4-bil.

     Inpex has not yet been able to secure major partners for the project,
which has put a question mark over previous expectations of the field starting
commercial production in mid-2008 at 150,000 b/d.

     The Japanese side also wants to review the financial terms of the deal,
saying costs have risen since the contract was concluded.

     For more information, take a trial to Platts Nucleonics Week at
http://nucweek.platts.com.

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