TEHRAN (Fars News Agency)- Iran and Oman plan to complete the development of the Kish gas field in the Persian Gulf by 2012.
The two countries will
proceed with the development with the sultanate footing the bill of up to
$12bln, an Omani energy ministry official said.
Iran and Oman signed a deal in April to jointly develop Iran's Kish gas field in the Persian Gulf at an estimated cost of between $7bln and $12bln, but did not give a timeline for the project at the time.
This latest announcement provides a dedicated time-scale for the project and signals the latest step forward. An un-named official told Reuters, "Oman is going to wholly fund the Kish gas field and we expect to sign an agreement at the end of 2008 so the plant can start producing gas for Oman by 2012."
"The project will involve a 200km (124-mile) pipeline, mostly underwater, to Musandam and Sohar. Phase one of this project will transport gas to Oman at a rate of one billion cubic feet per day and then rising to 3 billion cubic feet."
Iran's oil minister traveled to Muscat earlier this month to discuss the plans to export Iranian gas to Oman, from where it could be exported using an Omani liquefied natural gas plant.
The gas heading to the Omani LNG facility will be used by the National Iranian Oil Company, a state firm which oversees Iran's hydrocarbons industry, in its international markets and sales.
"Oman is also going to develop the Bukha gas field at a cost of $200m with a 100km pipeline transporting Iranian gas to Sohar and then eventually to Sur," the official said.
Sohar is home to major projects such as a 120,000 barrel per day refinery, aluminum smelter, methanol and fertilizer plants. Oman also needs to supply gas to Sur, to the 10 million tons per year Oman LNG and Qalhat LNG plants.
Iran, which sits on the world's second largest reserves of both oil and gas, is facing US sanctions over its civilian nuclear program. Sanctions are increasingly deterring Western investors from running activity in Iran.
Iranian officials have dismissed US sanctions as inefficient, saying that they are finding Asian partners instead. Several Chinese and other Asian firms are negotiating or signing up to oil and gas deals.
Following US pressures on companies to stop business with Tehran, many western companies decided to do a balancing act. They tried to maintain their presence in Iran, which is rich in oil and gas, but not getting into big deals that could endanger their interests in the US.
Yet, after oil giants in the West witnessed that their absence in big deals has provided Chinese, Indian and Russian companies with excellent opportunities to signing up to an increasing number of energy projects and earn billions of dollars, many western firms are slowly losing reluctance to invest or expand work in Iran.
Some European countries have also recently voiced interest in investment in Iran's energy sector after a gas deal was signed between Iran and Switzerland regardless of US sanctions.
The National Iranian Gas Export Company and Switzerland's Elektrizitaetsgesellschaft Laufenburg signed a 25-year deal in March for the delivery of 5.5 billion cubic meters of gas per year.
The biggest recent deal, worth €100m ($147m, £80m), was signed by Steiner Prematechnik Gastec, the German engineering company, this month to build equipment for three gas conversion plants in Iran. This is at a time when France's Total, Royal/Dutch Shell and Norway's Statoil have put on hold their shares in multi-billion dollar contracts.
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