Tehran sets deadline for South Pars project

Oct 17, 2007 02:00 AM

France's Total and Shell must finalise their gas deals with Iran by June next year or the giant South Pars project will go ahead without them, Pars Oil & Gas Company boss Ali Vakili has said.
Iran had previously warned the French giant not to bow to political pressure to steer clear of the Islamic Republic.

French President Nicolas Sarkozy called in September for tougher international sanctions against Iran's disputed nuclear work and warned Total and gas firm Gaz de France to stop investing in OPEC's second-biggest oil producer.
"Total and Shell have only until June 2008 to finalise their deals," Vakili was quoted as saying. "In the past few days and in order to finalise the deals... we gave an ultimatum to Total and Shell and if we don't reach an agreement with them we will not extend the time for talks," Vakili said.

Both Shell and Total have said rising industry costs had delayed their multi-bn dollar investments in Iran's first liquefied natural gas project, which would be fed bythe giant South Pars gas field.
The Anglo-Dutch company has a preliminary deal to develop part of the South Pars gas field, despite Washington urging its allies not to invest in Iran because of nuclear work it suspects is aimed at building bombs. Tehran denies the charge.

Total agreed to take on the project to build Iran's first LNG export terminal in February 2004, with an initial start date of 2009 that has since been pushed back to 2011 after years of wrangling over terms. Iran initially said the project was worth $ 2 bn, but construction costs have since spiralled throughout the energy sector. Iran's caretaker Oil Minister Gholamhossein Nozari said in September a price in excess of $ 11 bn quoted by Total was too high for Iran and that his country could easily find replacements.
"We are having intensive negotiation with them (Total and Shell) in this regard," Vakili said.

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