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IRAN CANCELS SOUTH PARS PROJECT ACCORD

Jan. 24, 1994

National Iranian Oil Co. (NIOC) has canceled an agreement for an Italian led group to develop South Pars offshore gas and condensate field. This followed the group's failure to raise 85% of the project's total $1.7 billion funding as required. Middle East Economic Survey reported the group is led by Technologie Progetti Lavori SpA of Rome and Saipem SpA of Milan and included Mitsubishi Corp. of Japan and Machinoimport of Russia.

National Iranian Oil Co. (NIOC) has canceled an agreement for an Italian led group to develop South Pars offshore gas and condensate field.

This followed the group's failure to raise 85% of the project's total $1.7 billion funding as required.

Middle East Economic Survey reported the group is led by Technologie Progetti Lavori SpA of Rome and Saipem SpA of Milan and included Mitsubishi Corp. of Japan and Machinoimport of Russia.

NIOC's letter of intent was issued in September 1992. It stated that NIOC would put up 15% of the investment in cash, while $1.1 billion would come from the Italian group and $350 million from the Japanese.

London's Financial Times attributed the shortfall to the refusal by SACE, an Italian export credit guarantee organization, to fund the Italian part of the deal.

Iran believes South Pars to be an extension of Qatar's North gas field into Iranian waters. It estimates reserves in South Pars are estimated at 100 tcf of gas and 3-4 billion bbl of condensate.