Iran signed a multi-billion dollar deal with Malaysia on Wednesday to develop two offshore Iranian gas fields, boasting that the planned investment was the biggest ever in the country. The mega deal comes in defiance of US pressure on European and Asian firms to reduce their business with Iran's oil and gas industries, which are in urgent need of foreign investment.
Iran's Pars Oil and Gas Company (POGC) and Malaysia's SKS signed the six-billion-dollar (4.15-billion-euro) final contract for development of Golshan and Ferdos gas fields a ceremony in Tehran, state television showed.
"The estimate for the investment for both the upstream and (gas) sweetening sectors of the project is about six billion dollars," Oil Minister Gholam Hossein Nozari said.
Nozari described the deal as the "biggest investment in the country" and said his administration would now focus on Asian companies as opposed to Europeans which were once Iran's top energy partners. "The Iranian oil ministry's emphasis is towards Asian companies," Nozari was quoted as saying by the state news agency IRNA.
The United States and EU governments are pressuring European firms to cut back their business with Iran as another lever to pressure Tehran into backing down in the stand-off over its nuclear programme. Iran also earlier this month closed a two-billion-dollar deal with China's Sinopec to develop the Yadavaran oil field, another crucial deal for its energy industry.
Iran considers such huge energy deals, completely financed by a foreign investors, as a breakthrough in the face of US pressure strangling development of its energy sector.
The country is in urgent need of investment to develop its gas fields both to cover domestic consumption and fulfil its ambitious export plans for Europe and eastern Asia. The Anglo-Dutch energy giant Shell and France's Total have been delaying finalisation of multi-billion-dollar deals with Iran, which has repeatedly said it would not wait for foreign companies to start energy projects.
Nozari pointed to joint projects with Malaysia including construction of refineries in Iran's southern city of Shiraz as well as with other prominent Non-Aligned Movement (NAM) states Syria and Venezuela
The buyback-based project with SKS would be completed in about five and half years, Nozari said. Iran and Malaysia had in January signed the original memorandum of understanding to develop the upstream, downstream and LNG transportation sectors for the two gas fields.
Nozari said the full agreement would be worth 16 billion dollars when the final contract is signed on the LNG phase. "The liquefaction sector, the LNG, whose contract will soon be ready to sign, would be worth about 10 billion dollars."
Based on the initial agreement, SKS and National Iranian Oil Company will each receive 10 million tons of LNG per year. The original LNG agreement with Iran is for a 25-year period.
Golshan's reserves amount to more than 50 trillion cubic feet (1.5 trillion cubic metres) of gas and it is expected to produce 2.5 billion cubic feet (70 million cubic metres) of natural gas per day.
Ferdos' gas in place stands at around 10 trillion cubic feet (285 billion cubic metres) and it would produce more than 880 million cubic feet (25 million cubic metres) of gas on a daily basis. Iran's estimated gas reserves, the world's second largest after Russia, amount to 971.15 trillion cubic feet (more than 26 trillion cubic metres).
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