Iran prefers Persian Gulf gas to Caspian oil

Originally at: http://www.iranmania.com/News/ArticleView/Default.asp?NewsCode=35670&NewsKind=Current%20Affairs

LONDON, September 18 (IranMania) – Iran lacks the know-how to pump crude from the deep waters of the Caspian Sea and views it as a low priority when the world?s largest reservoir of gas sits invitingly under the shallow Persian Gulf, according to Reuters.

Tehran had hoped to get Caspian output flowing last year but commercial and political disincentives to work in Iran have meant foreign firms with deep-sea technology have taken their skills to neighboring producers.

Although Caspian resources would be welcome to Iran, whose energy-guzzling capital lies in the north, the Persian Gulf is too alluring to resist and acting Oil Minister Kazem Vaziri admits it takes precedence.

?The top priority of the Islamic Republic of Iran?s government in the oil sector is developing the shared South Pars Gas Field as soon as possible,? he was quoted by saying by newspapers last week. Abbas Maleki, chairman of Tehran?s International Institute for Caspian Studies, agreed that developing the world?s largest reservoir of natural gas, shared with Qatar, made far more sense: ?Exploration with a cheap cost is more available in the south.?

Even when oil prices are at record highs, Caspian investment from OPEC?s second biggest producer has been limited to seismic exploration.

Brazil?s Petrobras is negotiating an exploration deal in Iranian Caspian waters but nothing has been agreed.

?You have to go deep and the Iranians just cannot do that,? said a Tehran-based executive from an oil company with long experience drilling the North Sea, Reuters added.

Maleki said Iran could hardly hope to compete with huge European and US projects in Azerbaijan.

?Iran does not have this form of investment,? he said.

US. heavyweights Exxon Mobil and Chevron have been active in Azeri waters, along with North Sea veterans BP and Statoil.

The Caspian can be as deep as 600m, while the Persian Gulf fields are less than 50m.

One Western upstream oil consultant, speaking on condition of anonymity, said even experienced operators ran into trouble in the Azeri Caspian.

?Wells should cost $60-$80mn, Exxon spent $150mn on one very deep one,? he said.

?The odds are stacked against the Iranians?. The consultant added that most Western companies had been disappointed by Azeri exploration and would not be confident of rich pickings in Iran.

Many analysts have said Iran was slow off the mark to drill the Caspian because of a series of territorial disputes over the division of the surface and the seabed.

One such fracas over a Caspian block which Iran calls Alborz and Azerbaijan calls Alov flared in 2001 when Iran sent in a gunboat to chase off a BP seismic survey team.

Maleki said such incidents illustrated the need to smooth out territorial lines but had not stopped Iran from starting its seismic work.

?Iran is not going to wait to approve (territorial blocks) then start work, Iran is already active,? he said.

Although Caspian countries have managed to reach bilateral agreements with each other, a legal framework for the whole Caspian has proved elusive.

 

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