“PARTNERS TO NABUCCO SHALL CONVINCE US” - Mahmood Khagani, Director General for Caspian Sea and CIS Oil and Gas affairs, Deputy International Relations, of Ministry of Petroleum I.R.Iran
Caspian Energy (CE): Mr. Khagani, how would you estimate Iran’s export potential for oil&gas?
Mahmood Khaghani, Director General for the Caspian Sea and CIS Oil and Gas Affairs, Deputy International Relations, of Ministry of Petroleum I.R.Iran: Iran’s export potential is quite high but what we need is to make our resources developed to bring them to the areas that need gas and, I am sure, especially to Europe that can attract investments to Iran and develop our resources.
The gas production in Iran today is nearly 5 billion ft3 (with possible increase to 12 billion ft3) per diem. The oil production is 4.1 mbd (to be increased to 5mbd). We need investments of 10-20 billion USD per annum to achieve these indicators.
CE: What are Iran’s plans on the development of Iranian sector of the Caspian Sea?
Mahmood Khaghani: Yes, we have such plans, in the Caspian sea we are building a MFDR and its support vesselswhicharegoing to be ready in the next few months. We chose potential blocks in deep offshore, already negotiating with Brazilian companies to perform drilling, exploration and production operations at these blocks.
CE: What are your plans on Turkmenistan’s gas import increase?
Mahmood Khaghani: Yes, we are willing to import as much gas as Turkmenistan can produce and export. At present we are importing some 8 billion m3 per annum, we have an agreement to increase the gas import to 14 billion m3, but we are willing to get even more.
CE: How profitable is it to make oil swaps with Kazakhstan in the Caspian Sea?
Mahmood Khaghani: The process is underway, the swapped oil amount is nearly 150 ton per diem, through port of Neka in the Caspian Sea.
CE: What are Iran’s plans on gas export increased under NABUCCO project?
Mahmood Khaghani: For NABUCCO project we are negotiating with the companies involved in the project, for ex. OMV, which has already signed the agreement with us and it is participating in LNG programs and developing one of our southern gas fields.
We can not participate in NABUCCO project as yet since there are some differences in our and Turkish opinions. And we are still talking with Turkish colleagues on this issue, but it has not been finalized yet on how the gas from Iranian resources could cross Turkey’s territory to join NABUCCO. Some people consider NABUCCO almost a dead project, they say it can not survive and become a viable project with Iranian gas. But the Iranian gas also faces the obstacles for development; one is some sort of restrictions on investments in Iran oil&gas sector, which is now imposed, and another one is Turkish transit to Europe. In this connection we keep on talking with the Ministry of Energy and Natural Resources of Turkey and Botas Pipeline Company.
CE: What are, in your opinion, the interface points between Azerbaijan and Iran in the oil&gas sector?
Mahmood Khaghani: There many points to name, we have a lot of negotiations with our Azeri brothers on cooperation in the Caspian Sea, offshore area and gas import-export to Azerbaijan and other areas, we have excellent relations with Azerigaz and SOCAR.
- You know that Iran and Azerbaijan have signed MOU concerning gas supply to Nakhchivan. The MOU also covers close cooperation on exploration, production and transportation of oil&gas resources in the Caspian Sea. So, therefore, the two governments meet regularly at FMs level and discuss issues of cooperation. I do not see any reasons for concern. At the end of the day we will have excellent relationship and develop these resources together.
CE: What is Iran’s opinion on the construction of Trans-Caspian gas pipeline?
Mahmood Khaghani: In my opinion, and there are many who supports me, it is a commercial issue. Constructing a pipeline across the Caspian Sea is going to be very expensive and environmentally risky project. At the same time it is not yet known to what extent exporters from the East of Caspian will have gas to export across the Caspian. That is also a question.
The best way would be obviously to commence NABUCCO in Iran and to cooperate with this project and later, if the gas for export from Afghanistan, Uzbekistan and Turkmenistan comes to the northern sector of Iran for domestic consumption, it will need place. Iranian gas is quickly exported by Turkish pipeline, which has already been constructed and is operational. This is the most economical way. Otherwise, NABUCCO has very prosperious future that means NABUCCO will become a successful project. So in fact Iranian gas can inject life in NABUCCO if Iran gets convinced that will benefit from joining it, so partners to NABUCCO shall convince us.
CE: How would you comment the signing of document among Turkmenistan, Kazakhstan and Russia governing the installation of Trans-Caspian gas pipeline from Turkmenistan?
Mahmood Khaghani: Some experts say if Turkmenistan’s and Kazakhstan’s gas go through the new pipeline Russia has offered to build, it will cost some 3 USD per 1,000 m3. Across the Caspian it was 2.6 USD, and, therefore, if you go across Iran it is around 50 cent. I can not say for sure, I did not calculate, but logically it is a short way. The major cost is the construction of the pipeline, and you will have much less cost towards Iran.
CE: What do you think of Araz-Alov-Sharg project that Azerbaijan has signed PSAs with foreign investors? Did y Iran’s government previously protest against this Caspian project?
Mahmood Khaghani: I can not give any comments on the legal issues as I am not an expert. Only Foreign Ministers of Azerbaijan, Iran and other littoral states have rights to discuss this question.
Thank you for the interview.