August 23, 2008
China, India, Iran Discuss Caspian Sea Energy
Text of report in English by official Chinese news agency Xinhua (New China News Agency)
TEHRAN, Aug. 23 (Xinhua) - Iran is in talks with two major Asian oil companies regarding the development of the South Caspian Sea region, the English-language Press TV satellite channel reported on Saturday.
The report quoted the National Iranian Oil Company (NIOC) deputy director Hojatollah Ghanimifard as saying in an announcement that NIOC has been discussing the issue with India's ONGC Videsh and China's state-run China National Offshore Oil Corporation (CNOOC).
NIOC is reviewing proposals to make the terms of the current contracts more attractive to international oil companies by offering them production sharing contracts for the first time, the report said.
Under such contracts the developer is entitled to a share of production, which allows them to recoup their investment costs and make improved profits.
Over the past 20 years, the NIOC has mainly offered pay-back contracts to developers under which the investor will receive a pre- agreed remuneration rate for its investment. The rate is typically determined by the global price of energy and the field hitting targets, and is paid over a 25 year period.
Some developers have voiced concerns over pay-back contracts, saying they offer serious risks to developers since their profits depend on the fluctuating global price of energy.
"We think this region might be the exception to the rule," Ghanimifard said. "Since it is deep water, it looks like the production cost per barrel would be much more than in other regions like the south, or the Persian Gulf."
The Brazilian state-run company Petrobras is currently drilling three wells in the Caspian Sea.
Originally published by Xinhua news agency, Beijing, in English 1108 23 Aug 08.
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