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Iran Revolutionary Guards pull out of gas deal over sanctions
Tehran (Platts)--19Jul2010/548 am EDT/948 GMT
Khatam al-Anbiya, the construction arm of Iran's Islamic Revolutionary
Guards Corps., or IRGC, said Saturday that it had pulled out of a $2 billion
gas project so as not to endanger the country's national interests after the
UN, the US and the EU banned any dealings with the IRGC and its affiliates.
Oil ministry news agency Shana said the group had withdrawn from the
project to develop Phases 15 and 16 of the massive South Pars gas field
because of the UN sanctions.
"Khatam al-Anbiya Construction Headquarters entered construction areas
to
help Iran and its people," the group said in a statement carried by the
agency. "Under the current circumstances, the continuation of its activity
in
[South Pars] phases 15 and 16 would possibly endanger national interests."
Therefore Khatam al-Anbiya and its subsidiaries "intend to use their
capabilities in other national projects and is pulling out of the consortium
to develop phases 15 and 16 of South Pars," it added.
The group, however, stressed that it was a non-military group which had
been hit lately by sanctions, which it referred to as a "cruel move" against
Khatam al-Anbiya.
Phases 15 and 16 were handed over to Khatam al-Anbiya in 2006 after
Norway's Kvaerner pulled out. The project aims to produce 50 million cu
m/day
of gas, 80,000 barrels of condensate and 600 mt of sulfur. It will also
yield
1.05 million mt of LPG and one million mt per year. The gas is intended for
the national grid and not for export.
FUNDING PROBLEMS
Oil minister Masoud Mirkazemi has denied that Khatam al-Anbiya has been
facing financial problems, which have delayed the project after recent
reports
suggested that the development was only 46% complete due to financing
issues.
The UN Security Council June 9 voted on a fourth set of sanctions
against
Iran to try to force Tehran to negotiate a resolution to the crisis over the
Islamic Republic's nuclear program. It listed the IRGC and 15 of its
affiliates as among state entities involved in nuclear proliferation.
The UN sanctions were followed by EU and US sanctions targeting
specifically the OPEC state's energy sector and banning dealings with a long
list of state-owned oil and gas companies, including the IRGC and its
affiliates.
The UN resolution ordered IRGC's assets frozen to prevent the powerful
group from financing its projects.
The US State Department in 2007 identified Khatam al Anbiya as one of
two
key Iranian entities that it said raised proliferation concern and banned
all
dealings with them.
The IRGC and its affiliates have grown into an economic power in Iran,
largely as a result of a succession of UN sanctions imposed by the
international community over suspicions that Tehran is secretly developing
nuclear weapons, a charge the Iranians deny.
The involvement of IRGC or its subsidiaries would make it difficult to
source parts and equipment from foreign companies, which run the risk of
being
in breach of the sanctions should they have to deal with Khatam al-Anbiya or
any other banned entity.
Khatam al-Anbiya has already bought parts and equipment for the two
South
Pars phases from South Korea (18%) and Germany (16%).
An Iranian newspaper said that another Khatam al-Anbiya subsidiary,
Sepanir Oil and Gas Co., which holds a 65% in the consortium, had also
withdrawn.
The new members of the consortium are Iran Shipbuilding & Offshore
Industries Complex Co., or ISOICO, as the leader, the Iranian Offshore
Engineering and Construction Co. and Saff (Offshore Industries Co.)
PROJECT ON TRACK
Abelghasem Nobakhti, the project's manager, said the withdrawal of
Khatam
al-Anibya and its subsidiaries would not delay the project. "The
implementation of the development project of the two phases will continue as
planned without any interruption."
Khatam al-Anbiya and related companies are still involved in the
development of several other phases in the offshore gas field and were among
a
group of domestic companies that won contracts worth $21 billion to develop
South Pars, which contains roughly half of Iran's natural gas reserves
estimated at 953 Tcf, putting it in second place after gas giant Russia.
However, sanctions and a lack of sufficient technology and funding has
meant that Iran has lagged behind fellow OPEC member Qatar in developing its
side of the massive gas deposit that straddles the maritime boundary between
them and is known as the North Field on the Qatari side. Iran is actually a
net importer of natural gas and several of its ongoing projects to develop
other phases of South Pars are behind schedule.
The Iranian oil ministry said recently that the development of South
Pars
was a top priority and streamlined its domestic gas businesses in order to
achieve these aims, while issuing eurobonds and local paper to help fund the
massive projects. Iran needs to inject massive amounts of natural gas into
its
oilfields to maintain reservoir pressure and also to supply its
petrochemicals
sector.
A delay in developing the remaining phases of South Pars is one of the
aims of the US sanctions, which are designed to squeeze the energy sector,
one
of the biggest sources of foreign revenue for Iran.
--Aresu Eqbali, newsd...@platts.com
[Non-text portions of this message have been removed]
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