The Soroosh & Nowrooz project, now one year old, is moving right on schedule. I think it is very important that we are on track to achieve the 30% Iranian content of the project. In addition, we will continue to develop further possibilities to increase that Iranian content. But we are getting now to the stage where basically all the main contracts have been awarded for construction, installation, main production facilities, and supply.
Shell has also finished the 3D seismic acquisitions, and here again the company is ahead of the plan first initiated. We are now in a process to optimize the location of wells that must be drilled, while waiting for the arrival of the first rig, which will be joined by the second rig next year.
The project has made a fine progress, a part of which can be credited to the excellent cooperation that we have had with NIOC. We had a very good anticipation of potential problem areas which have been preemptively solved before they could leave an impact on our progress. As a result, the project is now less than a year until the first production.

Our South Caspian study in cooperation with Lasmo, Veba and KEPCO is near completion. Reports containing the exploration prospectivity of the southern part of Caspian are to be shortly submitted to KEPCO. Following that, we would have the opportunity to discuss future exploration operations. This study has looked at the prospectivity but in the end, only exploration and drilling will determine if there are indeed oil or gas deposits under the Iranian part of the Caspian Sea.

Shell has submitted a proposal for the development of all the three fields in an integrated fashion. We know that other companies have also submitted their bids. We look forward to negotiating with NIOC to open the gates for a successful project award in competition with other companies.

I think we have an excellent proposal which not only focuses on the development of all the three fields, but also on other important aspects such as environmental impacts of the operations in the area. Khuzestan is an area with a lot of agriculture and we need to make sure that our operations there would work for protecting the environment. Moreover, our company wants the local population to trust that our operations are beneficial to them. We are involved in identifying a number of initiatives for the benefit of the local population in certain aspects. This stems from our commitment to sustainable development, which is defined as: recreation of wealth, protection of the environment, and bringing benefit to the local population. All three areas need to be equally covered in any investment proposal put forward by Shell. So I’m looking forward to negotiating the agreement on technical and economic aspects, while putting a lot of emphasis on environmental and social aspects of our presence in Khuzestan.

Shell has signed an MoU with NPC and NIOC International for a scouting study for construction of a gas-to-liquids plant in Assaluyeh. This plant which we call SMDS (Shell Middle Distillate Synthesis process) would be part of an integrated project involving the development of one phase of the South Pars. This gas field would provide gas as the feedstock for this GTL plant. This advanced gas-to-liquids plant is distinct from LNG, and products coming out of this plant are basically diesel, kerosene and naphtha. This would be a chemical conversion process the advantage of which is the purity of products which means zero pollution. Therefore, the products coming out of this plant will have great demand in the markets across the U.S., Europe and the Far East where the quality requirements are becoming increasingly difficult and not easily matched by refineries. What we have proposed to NIOC and NPC is a second-generation plant providing 70,000 barrels per day. The scouting study is on its way and hopefully we’ll provide the conclusion during the first quarter of 2001. This would be followed up by a feasibility study which may lead to a decision to implement the project in 2002. It is anticipated that a GTL plant would be operational in Assaluyeh by the end of 2005.
An effective commercialization of Iran’s gas reserves, capability of adding further trains for either GTL or LNG, and getting 10,000 bpd of sweet water will be some of the main benefits of this plant.

My impressions have only been strengthened by what I have seen. Iran has tremendous potential and we are actively pursuing operation possibilities in all areas. Hopefully, if we are successful in our negotiations with NIOC, we will be able to add another oil development project to the Soroosh and Nowrooz. That would be a project two to three times larger than the Soroosh and Nowrooz project. So that would be a significant addition to our development activities in Iran. We are actively trying to commercialize Iran’s gas reserves. We have been working on plans to make Iran a gas exporter either via Iran-Pakistan-India pipeline or through LNG projects. But we foresaw that gas-to-liquids (GTL) process would actually be able to provide the first and quickest commercialization of Iran’s gas reserves. The pipeline is technically feasible but there are some political matters to be solved.

I’m very positive. I’m very glad to see new companies coming here. Some of them I have worked very closely with, and yet they are our competitors and I welcome competition. It is very good for the industry. Competition keeps companies on their toes, it is the catalyst for innovation. Everywhere in the world competition has benefited both companies and countries and the case of Iran will be no exception. International companies can bring a lot of expertise to Iran. On the other hand, we still feel that Shell has been more or less a pioneer in Iran in agreeing with the authorities on all the conditions that apply to foreign investment including taxes, visa arrangements and project management. As a matter of fact, we have experience of working with many types of government systems and economic conditions in about 140 countries where we operate. In Iran, we are able to adapt ourselves to whatever the Iranian people decide about their future.as reserves.