How advanced is the tendering process for National Iranian Oil Company (NIOC) LNG?

We have prequalified the main bidders. They must sign up to a confidentiality agreement with the licensors and then they can purchase the documents – they are available. Many excellent contractors were not prequalified as lead bidders because only a few companies have good experience in LNG. Those that did not prequalify can join up in consortium with the lead bidders.

The tender will be for two trains each of 4.85 million tonnes a year [t/y]. There will be a six-month bid deadline – around mid-2004 – to allow a contract award by the end of the year. Construction will take 42 months.

We have not decided whether to award both trains simultaneously. In the documents it said bidders should quote for two trains, with the possibility of starting one train first. Probably we will do the two simultaneously because there was high interest.

Will BG’s name be on the tender as joint client with NIGEC?

Negotiations continue with BG for NIOC LNG. There are many negotiations with many companies. Sometimes small issues keep the project delayed but we’re working to overcome this. We’re in a good situation and will soon have some news of a sale and purchase contract.

How far advanced are the other LNG projects?

Pars LNG [with France’s Total and Malaysia’s Petronas] and Persian LNG [with the Royal Dutch/Shell Group and Spain’s Repsol] are both at the same level. Front-end engineering and design (FEED) work has not started yet. I hope it will start for both in the first quarter of 2004. Negotiations are very good and we will soon hear good news from both.

I believe Pars and Persian LNG will start at about the same time. NIOC LNG will come to the market in 2008 and Pars and Persian LNG in 2009, but they will arrange the phasing themselves as each project will have two trains. There is not a market problem because they are each arranging their own markets.

Is the upstream gas supply arranged?

NIOC LNG will be supplied through South Pars phase 12, but because the LNG project belongs to NIOC, we are guaranteed full supply of gas until 12 is operational. This will mainly come through phases 6-8.

Phase 11 is for Pars LNG and phase 13 is for Persian LNG. Pars Oil & Gas Company [POGC] is responsible for the upstream, but we are responsible for co-ordinating the projects. Phase 12 bidding was done at the same time as phase 11, but the exploration well was pulled out of the tender. We have permission from the high economic council to negotiate the upstream directly – so that’s what we are doing for phase 13 for Persian LNG. Final negotiations for phase 11 are proceeding – it will probably be with Total. Phase 14 was for GTL but it has stopped for the time being to wait for the other GTL projects to move forward.

Has Shell’s big GTL agreement in Qatar delayed or harmed Iran’s GTL plans?

From Shell’s point of view, the Qatar deal probably has impacted on its Iran GTL plans because of investment priorities and so on. From our point of view, it has not, because there is not a limited market for GTL. NIOC is keen to have different GTL projects moving forward.

It has been reported that you are now looking to supply more than 500 million cubic feet a day (cf/d) of gas to the UAE, rather than the 150 million-200 million cf/d originally negotiated. At what stage are negotiations?

The discussions are on the larger amount of gas for the UAE. If nothing goes wrong, the project could be commissioned within two years – by 2006. That means a tender in the next year if the project is finalised. Each country will handle the pipeline contract up to the border.

How important are gas exports for Iran?

There is a feeling at all levels in the country that our gas export capability should be pushed. We have the second largest reserves in the world yet our market is very small. We should accelerate to gain our real role in the international market. We have been a very reliable supporter of oil, even through the war. Why shouldn’t we have a good gas market too?