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Iran admits oil projects suffering
Irans oil minister on Wednesday admitted that Tehran was having trouble financing oil projects, in a rare acknowledgment of the economic cost of its nuclear dispute.Currently, overseas banks and financiers have decreased their co-operation, Kazem Vaziri-Hamaneh told the oil ministry news agency, Shana. The statement underlined the impact of de facto financial sanctions on the Organisation of the Petroleum Exporting Countries second biggest oil producer. As the controversy over Irans nuclear programme has escalated, the US has applied pressure on European banks and financial institutions to curb dealings with Tehran. The fact that the UN Security Council could soon impose the first even if mild sanctions against Iran has compounded the political uncertainty and risks of doing business with Tehran. Iranian officials insist there is international interest in investing in Irans oil industry and European executives play down any impact on companies seeking deals in Iran. The National Iranian Oil Company has signed a memorandum of understanding with Chinas CNOOC to develop the North Pars gas field. The memorandum, if it turns into a final deal, would bring $16bn worth of Chinese investments for the initial part of any deal, the semi-official Fars news agency reported on Wednesday. But western officials hope the financial squeezes effect on the oil industry, the backbone of Irans economy, will help raise domestic pressure for a change of policy and persuade the regime to heed international calls for a suspension of its uranium enrichment programme. Irans oil production capacity, at 4.3m barrels per day, is set to reach 5m bpd, according to the countrys latest five-year plan, which closes in 2009. This would involve $16bn of investment in the sector. But the International Energy Agency reckons that Irans longer term plans to lift oil production to 6.8m bpd by 2030 would require nearly $80bn in investment, with expansion plans for the gas industry requiring an extra $85bn. Theres a growing awareness that de facto sanctions are beginning to hurt and everyone understands the future of the economy depends on the development of oil and gas, said a western diplomat. Banks are not lending, partly because of US pressure, but the banks are also drawing their own conclusions. Mr Vaziri-Hamaneh said projects would be financed from the Oil Stabilisation Fund, which accumulates oil windfalls to promote the private sector and save for periods of low oil prices. Posted by: .com 2006-12-21 |
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