In an interview Iran’s Minister of Petroleum, Vaziri Hamaneh, emphasized the openness of the petroleum sector in attracting foreign investments. He also highlighted the capacity of the Ministry in assessing the value and potential of proposed plans.

It would not be logical for these companies to announce such contracts had they been mere formalities since they are both active within the international arena and doing so would have damaged their standing. They have announced that they are not under U.S. pressure and even if they were, they would decide on the contracts according to their own self-interests. Experience shows that Iranian projects are attractive and therefore an oil institution would not miss such opportunities. The announced contracts are the result of 1.5 to 2 years of talks that precede my tenure in office. They have been signed and I am sure the companies are very eager to cooperate with Iran.

We have not given and will not grant any concessions to any company. Iran’s oil and gas projects are very economical and there is no need to do that. The contracts with Shell and Repsol were signed according to new terms and conditions. The amended articles of the buyback contracts are put into consideration within the ratification of the Economic Council.

According to the previous version of the contract, the companies first offered a fixed price and later put the different parts of the project out into tender. But during the operations, they faced the growing prices of products and equipment and consequently the majority of them announced they have incurred losses because fluctuations in oil prices caused an increase in the price of equipment and the cost of operations.

Foreign companies are keen to participate in exploitation operations and to be a partner in production, but the law prevents us from sharing the reserves with any party.

Based on the new version of the contract, Iran will accompany the contracting companies and contractors during the implementation of the project. In other words, all parts of the agreement will be put under the management of the main operator and the cost of the contract will be drawn up in collaboration with the employer, Ministry of Petroleum. If the price of the required equipment is beyond the rate the two sides have predicted in the contract, the Ministry of Petroleum will compensate for some part of the extra expenditure in order to make the contract less expensive for them. Meaning, the new version of the contract has considerably reduced the risk for contractors or operators, while improving their motivation to get active.

No. Foreign companies are keen to participate in exploitation operations and to be a partner in production, but the law prevents us from sharing the reserves with any party. However, we are outlining a plan that would allow the companies to cooperate as consultants during the production process. The companies and the National Iranian Oil Company (NIOC) welcome this idea.

The initiative, however, has yet to be included in the newly amended buyback contracts. In the beginning of the development plan, the companies present their plans and leave the field after the development, when production stabilizes. Although the companies are not allowed to share the reserves, they have voiced their willingness to work as consultants to gain experience in the production process. Moreover, this allows consultants to study the production mechanism and to offer their proposals which the NIOC will put to effect if they are deemed positive.

That is not correct and those who are involved in the process do not think so. The companies offer their master development plan (MDP) and the Petroleum Ministry has the final say. This might have been the case in the past when we lacked the necessary equipment, but now we are the decision makers and we give the green light to proposals.

I do not agree with such a statement. I think we have made good progress in areas such as reverse-engineering and geology and we do not necessarily accept foreign proposal without consideration. Moreover, we have a high number of college graduates, even at the Ph.D. level, and we have also dispatched a great number of students abroad. Our universities are teaching the fields, helping the country manage and carry out oil projects. So, we would not agree to project proposals blindly.

The volume drop is between 240 to 250 thousand barrels. But we are implementing development plans and compensating for the shortage every year.

Experts have their own ideas, while the Ministry of Petroleum is implementing its own policy. We compensated for the drop in oil production this year without developing any new field and even boosted production by 50 thousand barrels. The capacity of oil production in Iran is high and we have drawn up plans to make up for the fall in production. The NIOC drills 240 wells every year, some of which help increase production and some help explore and produce gas.

We have outlined plans for all joint and border fields. The tenders of the last six phases of South Pars field are being prepared and the contracts of some phases are being inked. No project is out of plan.

There are nearly 1,600 that are regularly undergoing reparation and injection operations. In the past year we injected 80 million cubic meters of gas into the reserves per day and the figure will be doubled next year and will reach 350 million cubic meters within the next ten years. So, oil production will increase.

Naturally we are. We have planned to boost production by 5.2 million barrels throughout the Fourth Development Plan period (2005-2009), but the projects are in dire need of investment.

We are going to add one million barrels to the current production process; this will require 12 billion dollars.

Yes.

It is difficult to add such a volume, but the goal is important and the required investment needs to be made. In the meantime, we have the onshore fields of Azadegan, Yadavaran, North Azadegan, Jofair, and Darkhoein and the offshore fields of Ressalat and Reshadat that would gradually enter into production until that time.

Nearly, 26 percent on average. The re-production process is done at a certain time.

I accompanied the President during his visit to China and met with the Chinese Development and Planning Minister. He voiced Beijing’s eagerness to cooperate with Iran in the development of the different South Pars phases. But, we proposed other fields for their consideration, as we were negotiating with other companies on the SP at that time. After a while the Chinese offshore industries company, SINOC, relying on its own study on the North Pars field proposed to work on the field and we agreed. The project with SINOC is the largest Chinese project and we are now talking regarding the difficulties. The Chinese will invest 16 billion dollars and produce liquefied natural gas (LNG) in collaboration with the Pars Oil and Gas Company (POGS). Negotiations are going well so far and we hope the contract will completed soon.

We have not ignored any field for the sake of another. I don’t believe it’s fair to take this kind of approach. We have outlined plans for all joint and border fields. The tenders of the last six phases of South Pars field are being prepared and the contracts of some phases are being inked. No project is out of plan.

We have to work on central fields, as well. It is not sensible to turn a blind eye to domestic potentials. Foreigners are also eager and therefore we have to hire overseas companies and develop these fields.

I suggest you step in and handle the negotiations, may be then we would reach an agreement sooner! I don’t think there has been any delay at all. Such long-term projects require extended negotiations.

Gas consumption is rapidly growing in the country. The Ministry of Petroleum is producing enough gas to meet domestic demand. But at certain times of the winter season, consumption goes beyond expectation and the Ministry of Petroleum does not necessarily produce according to increasing wintertime consumption, or an unexpected consumption peak.

Such high production demands huge investment and such a big investment would work for just two months of the year and would be wasted for the remaining time of the year. So, it is wise to avoid such an investment. We have to make the balance by formulating other strategies, including the development of a culture of consumption.

We are responsible for supplying the power plants with fuel, but other organizations must fulfill their obligations, too. At present, the power plants are working at 30 percent of their capacities. It means they transform 30 percent of gas into electricity. Shouldn’t the Ministry of Energy move towards the construction of combined cycle power plants with high output? The Ministry of Petroleum is not to blame for all the problems of a system as it by itself is not able to solve all the difficulties. Still, it is not possible for a ministry to make such a huge investment.

We have recently prepared the gas balance that predicts the plan for the next 20 years and has been approved by the Management and Planning Organization (MPO). The volume of production, consumption (commercial, household, and power plant), and exports has been included in that balance.

Because we are not obliged to make all our plans public; the MPO has been informed and the plan should be updated every year as possible delays could postpone it.

All objectives of the plan have been targeted logically. The shares of production, consumption, and export have been discussed separately and the implementation of each part would not obstruct the other section. We have the capacity to have a strong presence in the gas market and we must be among the main players in the international gas scene.

There is an assembly called Gas Exporters Assembly that comprises Russia, Qatar, Egypt, and Trinidad & Tobago. The assembly started work in 2000 and has organized some sessions every year. Qatar is to host the next session in May. The idea of an OPEC-style gas organization will be discussed by the assembly members in Qatar. Since its establishment, some countries have not cooperated well, but they are gradually being cooperative. Westerners think we are going to set up a cartel like OPEC while OPEC is not a cartel.

The main objective behind the OPEC-style gas body is to make decisions on production, development of fields, transfer of technology, and exploration of avenues for research that could result in scores of advantages for the producers and consumers.

The main consumers are also encouraged to make investments.

Yes, they are right. But it does not mean that we cannot establish an organization with an independent secretary general setting common policies. We could have joint ventures and guarantee their enforcement.

If such an organization is set up, the market presence would shift into cooperative from competitive. At present, every country is thinking of its own interests. But in that case, the interests of all gas exporting states would be taken into consideration. Meanwhile, the projects on production, conversion, and transfer of gas at international level will become more practical and seek certain goals and above all the market will be stabilized.

It depends on investment. We are formulating plans for 2012.

It is not clear yet; it depends on the volume of production.

It has not been discussed yet.

We don’t have any problems with Turkey. They have their own policies and we need to hold more talks. There are legal procedures that need to be completed as well regarding the protection of pipelines going through Turkish soil.

We have exported 5.6 million tons of petrochemicals in the current Iranian year (started March 21, 2006), fetching the country three billion dollars. But we have to wait for the output of petrochemical units.

It is better to announce it after the units reach production stage.

One petrochemical complex will start production every two months as of the next year (to start March 21, 2007). There are 33 petrochemical units which will help boost production and exports.