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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 Oil ministry news agency Shana said the group had withdrawn from the project to develop Phases 15 and 16 of the massive South Pars gas field because of the UN sanctions.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] ------------------------------------ -------------------------- Want to discuss this topic? 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