TEHRAN - Sliding crude prices and rising costs are delaying oil and gas plans in the Gulf region, an Iranian executive said on Sunday, a day before three offshore gas development projects are to be officially inaugurated.
Iranian officials have said engineering, consulting and contracting costs have more than doubled in the past year and a half, and could hurt projects. Iran has also warned that low oil prices could hit investment in boosting oil and gas output.
Oil prices have halved from the $147-a-barrel peak in July, plunging to a level where some economists say Iran's government will need to shrink its bloated budget to balance its books.
"In view of fluctuating oil prices, 80 percent of oil projects in the area (of South Pars gas field) have been delayed and in Arab countries some major oil projects have been delayed or shut down because of the rise in costs," said managing director of state-owned Petropars, Gholamreza Manouchehri.
His remarks, carried by the state broadcaster's website, were made before Monday's visit by President Mahmoud Ahmadinejad to Iran's gas center, Assalouyeh on the Gulf, where media said he would inaugurate three offshore development phases.
Manouchehri said phase six of Iran's vast South Pars field was ready to come on stream, phase seven would be completed in the next week and phase eight would be completed by year-end.
"The three phases will bring Iran $7 billion in annual revenue and will produce each day 100 million cubic meters of gas, 160,000 barrels of gas condensates and 4,700 tonnes of liquid petroleum gas," Manouchehri said.
Petropars, wholly owned by an affiliate of the state's National Iranian Oil Company (NIOC), has been implementing the phases in partnership with Norway's StatoilHydro (STL.OL: Quote, Profile, Research, Stock Buzz) (STL.OL: Quote, Profile, Research, Stock Buzz). The development has faced a series of delays.
"In view of the increase in costs, there will be no profit for Petropars in this project (phases six to eight). In fact, all the resulting profit has been spent in the resulting project," Manouchehri said.
He also said he was concerned about the financial strain Petropars was suffering as a result of the offshore project, and said his firm, with StatoilHydro, had discussed the issue with
NIOC.
"It has been agreed to resolve this problem," he said, without explaining what that would involve.
StatoilHydro said in August it would not make any new investment in Iran, following pressure from the United States to isolate the Islamic Republic over its nuclear program, which the West says is aimed at making bombs. Tehran denies the charge.
StatoilHydro, which is the offshore operator for phases six- eight, has said it would see through its contractual obligations in Iran. It had been in talks to invest in new projects.
Iranian officials have said engineering, consulting and contracting costs have more than doubled in the past year and a half, and could hurt projects. Iran has also warned that low oil prices could hit investment in boosting oil and gas output.
Oil prices have halved from the $147-a-barrel peak in July, plunging to a level where some economists say Iran's government will need to shrink its bloated budget to balance its books.
"In view of fluctuating oil prices, 80 percent of oil projects in the area (of South Pars gas field) have been delayed and in Arab countries some major oil projects have been delayed or shut down because of the rise in costs," said managing director of state-owned Petropars, Gholamreza Manouchehri.
His remarks, carried by the state broadcaster's website, were made before Monday's visit by President Mahmoud Ahmadinejad to Iran's gas center, Assalouyeh on the Gulf, where media said he would inaugurate three offshore development phases.
Manouchehri said phase six of Iran's vast South Pars field was ready to come on stream, phase seven would be completed in the next week and phase eight would be completed by year-end.
"The three phases will bring Iran $7 billion in annual revenue and will produce each day 100 million cubic meters of gas, 160,000 barrels of gas condensates and 4,700 tonnes of liquid petroleum gas," Manouchehri said.
Petropars, wholly owned by an affiliate of the state's National Iranian Oil Company (NIOC), has been implementing the phases in partnership with Norway's StatoilHydro (STL.OL: Quote, Profile, Research, Stock Buzz) (STL.OL: Quote, Profile, Research, Stock Buzz). The development has faced a series of delays.
"In view of the increase in costs, there will be no profit for Petropars in this project (phases six to eight). In fact, all the resulting profit has been spent in the resulting project," Manouchehri said.
He also said he was concerned about the financial strain Petropars was suffering as a result of the offshore project, and said his firm, with StatoilHydro, had discussed the issue with
NIOC.
"It has been agreed to resolve this problem," he said, without explaining what that would involve.
StatoilHydro said in August it would not make any new investment in Iran, following pressure from the United States to isolate the Islamic Republic over its nuclear program, which the West says is aimed at making bombs. Tehran denies the charge.
StatoilHydro, which is the offshore operator for phases six- eight, has said it would see through its contractual obligations in Iran. It had been in talks to invest in new projects.
