Sheer Energy (Cyprus) holds a 49 per cent interest in a seven-year service contract awarded by National Iranian Oil Company (NIOC)to develop the Masjed-e-Soleiman oil field. The majority stake remains in the hands of the local Naftgaran Engineering Services Company.

Sheer signed the service contract, which calls for an increase in the oil field's production to 25,000 barrels a day (b/d) of oil, in early 2002. The contract was based on a buy-back formula and called for an $88 million investment over four years.

Sheer says it decided to sell its stake because it could not 'obtain appropriate financing or suitable partners' for the next phase of the field's development, which the company estimates requires an investment of $15 million.

At the time of the contract signing Sheer said that it was not breaking the US-imposed Iran Libya Sanctions Act (ILSA) since the company's share of investment over four years would remain below the critical $20 million annual threshold.

Masjid-e Soleiman is Iran's oldest oil field, with the first well drilled back in 1908. The 30-kilometre-long, seven-kilometre-wide field is one of several fields in the region producing from the Asmari formation. The field has an estimated 6,500 million recoverable barrels of oil (MEED 1:3:02).