Majlis Backs IPC Deals
Iran and Qatar share the giant South Pars gas reservoir, and now Iran and Qatar recovery level from the gas field has reached the same level. France's Total has agreed to develop Phase 11 of South Pars. Mohammad Khaledi, an MP sitting at the Energy Committee of Iran's parliament (Majlis) says the French company may earn $11 billion in revenue, but Iran would reap more than $100 billion in revenue from the development of this Phase.
Mohammad Khaledi, who represents Lordegan in Chahar Mahal & Bakhtiari Province, talked to Iran Petroleum in an exclusive interview. The following is the full text of his interview.
Q: As an MP from Chahar Mahal & Bakhtiari Province, how do you assess this province in terms of potential for attracting investment in oil, gas, refining and petrochemical sectors?
A: There is currently good potential for investment in downstream oil industry in this province. For instance, most Iran's trunklines cross the province and that could provide feedstock to investors in petrochemical and other sectors. Lordegan Petrochemical Plant is one of opportunities for domestic and foreign investment. Despite sanctions, the project has had 80% progress. Once operational, this plan can produce 1.5 million tonnes a year of chemical fertilizers and create jobs. We have also Boroujen Petrochemical Plant in this province. The petrochemical plant would receive feedstock through the West Ethylene Pipeline in Iran.
Moreover, in light of mothballed oil wells in some areas in this province, some other provincial officials and I tried to make arrangements for drilling new wells with cutting edge technologies so that this province could once again join oil-rich provinces. Furthermore, once oil has been extracted, a refinery may be built in Jamal Plain in this province. In our latest talks, the Petroleum Ministry agreed to oil extraction and establishment of an oil refinery if an investor volunteers to invest. Iran's Petroleum Ministry is currently pursuing the strategy of developing fields shared with neighbors and we also accept this strategy. Therefore, we are trying to absorb necessary investment and we can benefit from foreign investment.
Q: How do you assess the performance of Iran's Minister of Petroleum Bijan Zangeneh, particularly with regard to jointly owned oil and gas fields?
A: As you know Iran has recently managed, for the first time after the lifting of sanctions, to sign an agreement with Total to develop Phase 11 of jointly owned South Pars field. That is of high significance for Iran. In addition to capital, the company has agreed to provide state-of-the-art technology for gas compression platforms to Iran; an 18,000-tonne platform could guarantee sustainable production from this phase for more than 25 years.
Iran would have incurred more than IRR 1,250 billion a day in loss from non-development in South Pars gas field. That is while our province's total budget allocated for development projects stands at IRR 5,000 for a year. That indicates the level of Iran's loss.
Once President Hassan Rouhani took office for the first round, the petroleum minister concentrated on jointly owned fields, particularly South Pars, and we are now seeing Iran reach Qatar's production level from this field. Once Total finishes its work in South Pars, it will be gaining $11 billion in profits, but Iran's profits from this phase will be more than $100 billion.
One of the main positive performances of Iran's petroleum minister has been enhanced recovery from jointly owned fields, and he has managed to win back Iran's share of oil trade in world markets. Furthermore, more attention has been paid to domestic manufacturing over recent years.
Q: Now that sanctions have been lifted on Iran, are required mechanisms available for Iran to absorb foreign investment?
A: Yes, necessary mechanisms for domestic and foreign investment have been worked out and we stress this point in our negotiations with business delegations. For instance, all investee projects in Lordegan have been listed and introduced to foreign delegates. Of course in Iran, administrative red tape is tougher than in other countries; however, profits of investment in Iran would not dissuade foreign companies from investment in Iran. Today, marketing is a modern technique to attract investment. Within the framework of new oil contracts, Iran's Ministry of Petroleum has sought to enhance foreign investment.
Q: What do you think of the nature of new model of oil contracts (Iran Petroleum Contract), an example of which was the deal signed with France's Total?
A: Veteran Iranian experts and lawyers supervised these agreements which have been endorsed by Iranian regulatory bodies. These are the new generation of oil contracts and all countries in the world are familiar with this type of contracts thanks to the government's energy diplomacy. Like most members of the Majlis Energy Committee, I strongly support this type of agreement to accelerate development of oil industry in Iran.
Q: You are a member of the Majlis Energy Committee. What does this committee think in general of the Iranian Petroleum Ministry? Will it continue to support the minister and his plans?
A: The majority of members of Energy Committee hold a positive view of the performance of Petroleum Ministry, an example of which we can see in the committee's sustained support for the development of Phase 11 of South Pars with Total. Such support will go on.
Q: National Iranian Oil Products Distribution Company (NIOPDC) is the only subsidiary of the Petroleum Ministry to be directly dealing with people. As a representative of Chahar Mahal & Bakhtiari Province in Majlis, how do you assess the track record of the company in the province?
A: Chahar Mahal & Bakhtiari Province, a four-season province, has a population of more than one million. It has always been grateful to this company whose performance has been under watch round the clock because of its engagement with people's everyday life. Gasoline, gasoil and kerosene distribution centers are operating well in this province and there has been no complaint about fuel shortages.