Statoil near giant gas deal in Iran

Statoil is on the verge of landing a contract to develop a gas field in the Persian Gulf. The project is equal in size to Norway's largest, the Troll field, and would be one of Norwegian industry's biggest-ever foreign ventures. The director for Statoil's international projects, Odd Mosbergvik, said that Statoil is talking with Iranian Petropars about taking over development for phases 6,7, and 8 of Iran's share of the world's largest gas field. The physical construction work will be leased to a main contractor and various suppliers, meaning Statoil would finance and oversee the building of three gas platforms in the Persian Gulf, and a treatment plant for gas and light petroleum on land. Statoil's main concern at this stage is examine the framework under discussion and determine its profitability. "We expect final clarification in the course of this autumn," Mosbergvik told Aftenposten. He estimates the cost of the entire project at USD 3 billion, or a maximum of NOK 26 billion. Statoil will not be the only investor and Mosbergvik did not want to discuss how much of the development costs would fall to them. The project would be about as foreign as possible for Norwegian workers. Bulldozers roll in to a barren landscape broken only by a sleepy fishing village. The summer temperature can rise above a humid 50C/122F, and a frosty - legal - beer is nowhere in sight. There is nothing to do outside of work hours and Iranian authorities have forbidden female labor. A project in Iran carries considerable risk, and it is solely the developer's. Statoil representatives hope to get vital advice from French expertise, and have visited the TotalFinaElf plant that represents the completion of phases 2 and 3. The plant is built, gas flows, but the obstacles have been formidable. TotalFinaElf and main contractor Hyundai have had to build their own harbor after delays from Petropars. They financed an airport that was taken over by the Iranian military. Iranian sub-contractors are mandatory, and these often cannot deliver goods on time, or cannot deliver desired items at all. Import restrictions complicate the equation still further. Mosbergvik explained why such a risky and expensive project attracts Statoil. "It will contribute to secure income from places other than Norwegian fields. We need to establish ourselves in this part of the world and harvest experience. Income from this type of deal is less dependent on the price of oil because profits are agreed in advance," Mosbergvik said.