Arch rivals Iran and Iraq keen to develop reserves

The current turmoil in the Middle East is proving to be no deterrent to arch rivals - Iran and Iraq - in their eagerness to develop their respective vast reserves of oil and gas.

Contracts for the development of phase nine and ten of Iran's giant South Pars gas field will be signed by the end of March next year according to Iran's oil minister, Mr Bijan Zanganeh.

The announcement appears to signal a delay by Iranian authorities in the development of the gas fields, which is said to contain at least 350 trillion cubic feet of gas. In May of this year, Mr Zanganeh said contracts would be awarded by August.

Earlier this year, there was much media speculation about BHP Billiton's role in the South Pars development. According to media reports, BHPB was in the running for two major offshore Iranian oil field contracts, said to be worth $US359 million ($720 million). The projects would have tripled oil output from the offshore Forouzan and Esfandyar fields to 130,000 barrels a day.

A BHPB spokesman said the reports about the group's role in Iranian oil and gas development was purely "speculative", however the group was pursuing opportunities and had signed a contract with the Iranian government to conduct a feasibility study into a proposed pipeline.

With Iran said to hold about nine per cent of the world's proven oil reserves, companies such as Korea's LG, France's Technip and indigenous Iranian firms are keen to get a slice of the action. Each phase of development is said to be worth about a billion dollars in investment.

Despite being the subject of sanctions, Iran's nemesis, Iraq, wants to become the world's top reservoir and will turn to foreign firms to help achieve its goal. The Iraqi oil minister, Mr Amer Mohammad Rashid, said the country needs to develop hundreds of oil fields a year to turn its potential reserves into proven reserves.

Iraq's proven reserves currently stand at 112 billion barrels, leaving it in second place behind Saudi Arabia, which has reserves estimated at 261 billion barrels. Iraq wants to increase its oil reserves to 270 billion barrels.

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