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Iran eyes revival of key gas sector

AFP  |  Assaluyeh (Iran) 

Iran is working full throttle to develop its South Pars natural gas field, the world's largest, amid hopes of sanctions relief and the return of Western oil majors.

"We would welcome foreign companies and investors if they want to come back," said Hamid Reza Massoudi, chief engineer at an unfinished South Pars refinery near the town of Assaluyeh, 920 kilometres (570 miles) south of Tehran.

"They would definitely speed up the progress," Massoudi said, as work proceeded on the refinery's structure.

Development at the mammoth offshore field has been hobbled for years by sanctions imposed by the United States and the European Union, a lack of foreign and domestic investment and technical challenges.

Iran struggled to fill the vacuum after the departure of France's Total, Spain's Repson and the Royal Dutch Shell, and efforts to continue development through state-owned and quasi-private companies had mixed success.

But President Hassan Rouhani's stated ambition to resolve the dispute with the West over Iran's nuclear drive has raised hopes of relief from financial sanctions and embargoes that have drastically curtailed oil production and vital exports.

The diplomatic rapprochement could also spark foreign investment and lead to a return of oil majors to revive ageing oilfields and to South Pars.

Oil ministry officials say four plants in the field are near completion.

Among them is Phase 12, one of the largest in South Pars, that once fully operational could produce 81 million cubic metres of gas daily.

Its supervisor Alireza Ebadi said the USD 7.8-billion refinery would begin pre-production at 10 percent "within months", but the lifting of sanctions would speed up the project.

He said vital equipment, including "compressors that have been built in Germany on Iranian orders and are being tested right now", were still awaited.

"They are subject to EU sanctions and cannot be delivered."

Ebadi spoke to reporters during an organised visit by international media to Assaluyeh.

Once fully operational, the four plants under development would almost double current gas production of 290 million cubic meters, mostly used for domestic consumption, oil ministry officials said.

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First Published: Sun, January 26 2014. 09:55 IST