International Focus

Sept. 1, 1996
The two faces of Iran Iran is touring world capitals these days with a dog and pony show touting international participation in the development of its offshore petroleum sector and investment in the country's related infrastructure. There's nothing extraordinary about that, since half the oil producing countries in the world do the same thing from time to time. What is extraordinary is that the country is concurrently carrying out a campaign of anti-Western, partic

The two faces of Iran

Iran is touring world capitals these days with a dog and pony show touting international participation in the development of its offshore petroleum sector and investment in the country's related infrastructure. There's nothing extraordinary about that, since half the oil producing countries in the world do the same thing from time to time. What is extraordinary is that the country is concurrently carrying out a campaign of anti-Western, particularly anti-USA, propaganda and some say terrorism that flies in the face of the any goodwill and positive change that might come from the promotion and achievement of foreign involvement in Iran's oil and gas concessions and joint venture projects. And, of course, it is difficult to rationalize membership in a consortium with Iran, as both Iranian and Caspian powers advocate for the development of Azerbaijani and Turkmen reserves and the building of market pipelines.

At a recent petroleum conference in Tehran sponsored by the government, Iranian officials dangled numerous development projects before delegates from many of the major oil companies and offered reasonably attractive terms. At the same time, other Iranian spokesmen told the gathering that Iran was the logical outlet for Caspian oil and gas.

In its own waters, Iran is now seeking foreign development of five previously discovered fields in the Strait of Hormuz, and in the Gulf the enormous G and South Pars gasfields, not far from the Sirri A and E Fields being developed by Total. In the Caspian, Iran has jointed the Shaikh Deniz development consortium and made a gas deal with Turkmenistan.

While speaking at Tehran University August 2, however, Iranian President Ali Akbar Hashemi Rafsanjani called for all oil-producing muslim countries to cease sales of crude oil to the USA, saying, "If America uses commerce as a political ploy, why can't we?"

Rafsanjani denies Iranian culpability in promoting or carrying out terrorist acts, despite many indications that it trains and finances those who carry out those acts.

Suicidal sanctions

The wave of terrorist incidents from the Middle East to Atlanta and probably to the skies over Long Island, New York, have been instrumental in propelling the recently enacted Iran-Libya Sanctions Act rapidly through the reactionary US Congress, driven by zealot Senator Alfonse D'Amato, with unfortunate consequences likely. Although US President Bill Clinton said, when signing the controversial bill into law, "You cannot do business with countries that practice commerce with you by day while funding or protecting the terrorists who kill you and your innocent civilians by night," the reality is that most major American trading partners do precisely that.

They do so simply because trade sanctions don't stop terrorism; they generally punish the innocent and incite the very violence they oppose. Thus a chorus of angry protests of this prohibition of doing business with foreign companies with more than $40 million a year investments in Iran or Libya, has resounded from the governments of Germany (Iran's largest trading partner), Great Britain, France, Canada, Australia, China, and Japan, to name but a few, whose voices are reinforced by scores of other nations and most of the world's leading oil companies.

Historically, the oil industry has usually taken a business-as-usual attitude about its activities worldwide, often looking the other way and trying to ignore the political intrigues of their host nations, but that is becoming more difficult to do today. Look how the list has grown: Cuba, Iraq, Libya, Iran, Sudan, and perhaps in the wings, Myanmar, Colombia, and Syria.

Certainly, some will ignore the new sanctions as extra-territorial and thus an illegal imposition of one nation's will on that of other nations. It is, after all, selective and prejudicial - who, for example, is fostering the terrorism in Northern Ireland, England, Algeria, East Africa, South Korea, Afghanistan, India, Turkey, and Mexico? What is being done to bring Usamah Bin Ladin, the Saudi businessman who finances so much of the muslim fundamentalists' terrorist activities, to justice?

Others will honor these election-year posturings, with alienation of trading partners, loss of business, and added violence and misery the only result.


If you're going to:

Vietnam - Street crime, particularly in Ho Chi Minh City, has skyrocketed over the last year. The country is still one of the poorest in Asia, thus foreigners are an easy target for muggings, hotel-room robberies, and extortion, with cash and passports the object. Care should be taken in contracting for taxis and guides, and in making sure hotels are secure.

Russia - Crime still reigns at all levels in this near-anarchic country. Some frequent travelers have taken to packing "Russian clothes" to look less like foreigners, others are hiring bodyguards to accompany them. Main problems are robbery and muggings, but there have been several kidnappings and murders. Moscow is the worst, followed by St. Petersburg.

Nigeria - If you can avoid going, don't go now. The country is in turmoil, and every level of government is wrought by crime and corruption. A contributor to Offshore Magazine was robbed at gunpoint in downtown Lagos by two policemen. Customs and immigration officers at the airport will attempt to extort bribes simply to let you in the country. It's an intolerable situation made worse by a government that feeds off it.

Algeria - Another place not to go until better times arrive. Kill the foreigners is the byword these days in this terror-struck country. Oil workers, visiting businessmen, government officials, and innocent travelers just passing through have been murdered by the muslim fundamentalists here, who were elected to government but denied their seats by the current regime.

Briefs. . .


A huge explosion in Mexico's largest gas processing facility, located in the state of Chiapas near the Tabasco border, has caused a production loss of more than a billion cf/d of gas.

As a consequence, Pemex is shutting down production from several of its major gas producing onshore and offshore fields, and upping production from its oilfields.

Sable Island's gas development has moved a bit closer to reality, with Shell's and Mobil's filing of their development plan for the 3 tcf, six-field project. Production is set for 1999, at 400 million cf/d gas and 10,000 b/d liquids. Cost is estimated at US$1.5 billion.

Canada's much anticipated Hunt Oil/PanCanadian well off the western point of Newfoundland has been plugged and abandoned, with no second well on the books. The Rowan Gorilla IV, which drilled the dry hole, has been released. It's the second recent disappointment for Canada: Talisman's nearby well found only water two months ago.

Coastal Petroleum may be looking for drilling partners for its huge Florida Gulf of Mexico permit, which appears to be all but signed by the reluctant state officials. Courts may pen the papers, leaving Coastal open to explore the probably highly prospective play.

Ecuador has awarded an exploration and development contract to US-based Energy Development Corp. for the 3,497 sq km Block 3 in the Gulf of Guayaquil. Petroecuador estimates gas reserves on the block at 350 bcf.


Exxon and Shell have jointed Elf in the Congo's deepwater Mer Profonde Sud license, awarded in May. Elf retains 40% interest, with the other 60% equally divided between Exxon (Esso E&P Congo) and Shell E&P Africa. Located entirely in waters in excess of 1,500 meters depth, the new lease is 32 km west of N'Kossa and perches NW of Chevron's Block 14.

Elf's Congo Moho Field has given up a second positive result. The discovery well flowed at 3,500 b/d oil and 2,200 b/d oil from two levels, and the second has flowed at 4,700 b/d. Further evaluation is underway, but the field is expected to be quite large.

Marathon has signed an exploration and PSC with Gabon for the Akoumba Marin Permit, some 636,000 acres approximately 30 miles offshore in the North Gabon Basin. Water depths range from 600 to more than 6000 ft.

Gabon has granted Santa Fe Energy a contract for its Mondah Bay Block, which lies in the Atlantic Salt Basin. The basin holds some billion bbl of recoverable oil reserves, according to the company, which has already targeted several prospects where water depth is 100 ft and drilling depth less than 5,000 ft. First drilling will be next year.

Angola's Buffalo, Palanca, Pacassa, Impala, and Cobo gasfields are to be linked via a 46 km pipeline system in an EPIC contract awarded by Elf Angola to Stolt Comex Seaway. The project calls for Mideast sale of the produced gas.


China's Pinghu Field in the East China Sea is being developed via a production platform and facilities now being executed by Hyundai. Enercon is designing the facilities and deck to produce 21,000 b/d oil, 57 million cf/d gas. It will house a 90-man crew.

Pakistan's Oil & Gas Development Corp. has started exploration of the deepwater Arabian Sea region of the Indian Ocean off the coast of the state of Baluchistan. According to the Ministry of Petroleum & Natural Resources, the search will be for gas off the Makran coast south of Karachi.

A boycott of international companies doing business with the repressive Myanmar government kicked off in August. Led by the Danish government, boycotts have been called against Total, in particular, for its role in development and production of oil offshore Myanmar. So far, Texaco and Unocal have not come under fire, but a US government sanction is in the offing that might affect them.

Thailand's prized B11/38 Block went to Texaco in the recent 15th round, just awarded. It lies adjacent to Unocal's big Palin gasfield. Also awarded was Block B8/38, to Soco Thailand.

Australia's offshore locus has definitely shifted to Perth. Woodside has joined the migration of corporate HQ to Perth, and BHP Petroleum looks to be next. No wonder, the majority of E&P is now in Carnarvon and its sub-basins and the Timor Sea. June's leasing round had 22 of the offered 38 blocks in Western Australia.

Western Australia's Laminaria and Corallina Fields will be jointly developed by partners Woodside, BHPP, and Shell via a common FPSO, set to be built early next year. The joint development plan was to be submitted to authorities in August. Production is set for 1999.


Norway is planning a lease sale for the southern sector of the Barents Sea later this year, with a deadline date of January 1997. This after a considerable show of interest by 11 oil companies, who've formed into seven groups ready to undertake exploration and development of the area.

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