$600m Gas JV With Norwegian Firm

$600m Gas JV With Norwegian Firm$600m Gas JV With Norwegian Firm

A Norwegian oil and gas company is closing in on a $600 million contract with an Iranian petrochemical group for one of the first major gas deals since international sanctions were lifted.

The contract will be a joint venture between Hemla Vantage and Kharg Petrochemical Company, a quasi-privately-owned company, to produce and export liquefied natural gas and liquefied petroleum gas by 2017.

The potential deal is an indication of the post-sanctions energy ambitions of Iran that sits on some of the world’s oil and gas reserves, Financial Times reported.

“We are inspired that Iran really wants to shift from a traditional player to a modern player. Nobody would believe that Iran could be the first in the world to produce LNG from a floating production vessel in 2017,” said Gerhard Ludvigsen, a founding member of Hemla group and director of Hemla Vantage.

The joint venture will purchase 5.6 million cubic meters of flared gas from offshore oilfields near Kharg Island for up to 15 years. In its first phase, the site is projected to produce 500 tons of LNG and 200 tons of LPG per year.

Hemla Vantage said financing the new project will not be a problem, despite international banks being wary of doing business with Iran.

"Iran and Kharg Island have a lot of facilities, including jetties, pipelines and storage, which make projects much easier and economically justifiable," Ludvigsen said. “Iraq in this region could be the next target, thanks to its abundant flare gas.”

Ludvigsen added that European banks, including German institutions, are ready to finance the project, showing that “banks are opening up and are now being positive to engage with Iran."