China has paved way to bridge the lacunae of business isolation of Iran by signing a deal worth $2 billion few weeks ago. China’s biggest oil refiner, Sinopec and Iran signed a $2 billion agreement on developing the Yadavaran oilfield. Malaysia too at China’s heels signed a bigger deal with Iran to develop two gas fields in excess of $16 billion.
Iran’s Oil Minister, Gholam Hossein Nozari stated that this was the largest contract in the energy sector of the country. From the contract amount, about $6 billion is for development of offshore, $10 billion would be utilized for the development of onshore gas fields and some amount is allocated for the development of LNG transportation for a period of 25 years.
There was always pressure from the US to hamstring the deals because of Iran’s obstinate plans of pursuing its nuclear program. Still there are some major deals to see the light of the day, like Indo-Iran gas pipe line project, the Anglo-Dutch energy giant Shell’s and Total France’s multi-billion-dollar deals with Iran.
Iran’s Pars Oil and Gas Company (POGC) and Malaysia’s SKS contract will chiefly focus on the development of Golshan and Ferdos gas fields. Golshan’s reserves are estimated to produce 2.5 billion cubic feet (70 million cubic meters) of natural gas per day.
Ferdos’ gas would produce more than 880 million cubic feet (25 million cubic meters) of gas on a daily basis. Iran’s estimated gas reserves, the world’s second largest after Russia, amount to 971.15 trillion cubic feet (more than 26 trillion cubic meters).
Iran is expecting that the other deals would also come through soon with the discordant notes in the western chorus being clearly audible to avoid economic sanctions against her. US’ bungling up of gulf war by spinning a yarn of hiding weapons of mass destruction in Iraq too has helped Iran, diplomatically to succeed in clinching the deals.
The country is in urgent need of investment to develop its gas fields both to cover domestic consumption and fulfill its ambitious export plans for Europe and eastern Asia. The sudden spurt of economic growth among Asian countries has also increased demand in energy sector.
Most of the emerging economies in Asia and Europe have realized that any delay in responding to their energy needs would inversely affect their economic growth. In such volatile economic climate, Iran’s expectations of sealing the deals would not be a far cry from reality.