Iran looks at India, China to develop Caspian Sea oil reserves

The National Iranian Oil Company is in talks with India's ONGC Videsh, the overseas arm of the ONGC, and China's National Offshore Oil Corporation, for the development of oil reserves in the South Caspian Sea region, deputy director of the National Iranian Oil Company, Hojatollah Ghanimifard, said on the state run Press TV satellite channel on Saturday.

NIOC's standard 'pay-back contracts' is not enticing enough for developers, as they would receive a pre-agreed remuneration for their investments over a period of 25 years at rates ruled by the global prices of energy and the quantum of hits discovered in explorations.

Oil field  developers also find that the 'pay-back contracts' also pose serious risks to the investment for the developers who have expressed their concerns on the contract as their profits depend on the unpredictable global price of energy.

NIOC is now reviewing and restructuring the present terms of the contract, making it more lucrative to the developer by replacing the 20-year old 'pay-back contract' with a 'production sharing contract' wherein the developer is able to recover the cost of investment and also make profits.

Recognising the high costs of exploration in the deep waters of the Caspian Sea region, which may require special treatment Ghanimifard said, ''We think this region might be the exception to the rule, since it is deep water, it looks like the production cost per barrel would be much more than in other region, say compared with the south, or the Persian Gulf.''

Seifollah Jashnsaz, head of the National Iranian Oil Company (NIOC) accompanied by Hojjatollah Ghanimifard, will be visiting China at the head of a high-ranking delegation starting today to enhance their energy ties.

In the oil and gas sectors in March 2007-March 2008, Iran and China have conducted business to a tune of $20 billion according to the Iranian oil ministry.

China's National Offshore Oil Corporation is also negotiating a $16-billion deal with Iran to develop a gas field and build an LNG terminal