50 Energy Projects Worth $185b Ready for Bids

50 Energy Projects Worth $185b Ready for Bids50 Energy Projects Worth $185b Ready for Bids

Iran has identified 50 energy projects worth $185 billion that will be offered for bids, Oil Minister Bijan Namdar Zanganeh said late Saturday in an interview with state TV.

The projects, mostly in the fields of petrochemicals, refineries, natural gas, pipelines and development of oilfields, are to be carried out mainly by Iranian contractors, such that at least 60% of the projects will be handed over to Iranian companies, Zanganeh was quoted as saying by ISNA.

"Development of South Pars Gas Field has been hampered by lack of funding.'

The Oil Ministry owes more than $43 billion to the Central Bank of Iran and the National Development Fund of Iran.

According to Zanganeh, about 900 billion rials ($27.1 million) are paid as subsidies daily.

"The allocation of this enormous sum from oil revenues to fund the Subsidy Reform Plan has been a major hindrance for the key industry's development," he said.

Under a five-year plan launched in late 2010 and promoted as an “economic revolution” by former president Mahmoud Ahmadinejad, Iran slashed three-decades-old subsidies on energy and food commodities, replacing them with cash payments.

The official also pointed to the difficulties faced by the Oil Ministry confronted with regard to oil sales, shipment and insurance following the imposition of western sanctions on the country, which impeded repatriation of the already diminished oil revenues.

Blocked oil revenues in Japan, South Korea and India are estimated at $6 billion, while $2.5 billion are owed by European firms for their previous projects in Iran.

"The London seminar, in which Iran will offer some 50 oil and gas projects to international companies, will take place by the yearend," Zanganeh said.

The long-awaited Iran Petroleum Contract will be presented at the seminar.

Several international oil companies, including Royal Dutch Shell, France’s Total and Italy’s Eni, have expressed interest in the new contract.

Oil Output

Iran can boost oil production in one week after international sanctions are lifted, Zanganeh said.

Production can increase by 500,000 barrels a day in a week after sanctions end and by 1 million barrels a day in one month.

"Our lost share of the market, which was about 1 million barrels a day, will manifest itself,” Zanganeh said. "Within the next few months, we will return to the level of 3.8-3.9 million barrels."

Sanctions against Iran’s oil industry are expected to be lifted by late November.

Iran had the second-biggest output in the Organization of Petroleum Exporting Countries before US-led sanctions banned the purchase, transport, finance and insurance of its crude starting July 2012.

Oil exports declined to 1.4 million barrels a day on average last year due to sanctions, the US Energy Information Administration said June 24 on its website. Sales averaged about 2.6 million barrels daily in 2011 before sanctions, according to the EIA.

Under the nuclear agreement Iran and six world powers reached in Vienna last month, the US agreed to end efforts to limit Iran’s oil sales. The European Union said it would end the bloc’s embargo on imports once Iran complies with obligations to scale back its nuclear program.

No Permission Required

Iran, the third-largest producer in OPEC, produced an average of 2.85 million barrels a day in July compared with 3.6 million at the end of 2011, according to estimates compiled by Bloomberg.

"I have written a letter to OPEC informing that the sanctions are being lifted and that we are returning (to previous production levels)," Zanganeh said. "We are not asking anybody's permission to get our rights back."

Crude’s recovery from a six-year low earlier this year faltered, as leading members of OPEC pump at record levels to defend market share amid surplus supply from the US and Russia.

Brent crude, the global benchmark, fell about 50% last year and dropped 2.1% on Friday to $52.21 a barrel on the London-based ICE Futures Europe exchange.

Banks, including Citigroup Inc. and Goldman Sachs Group Inc., have said global oil markets will not feel the impact of Iran’s historic deal with world powers until early 2016 when sanctions will be lifted in lieu of curbs on Iran's nuclear program.