Iran is planning to create a $3.5 billion South Pars Investment Fund to overcome difficulties in raising international finance for the development of the giant South Pars gas field.
The fund, for which government approval may be finalised by July, will be located in Dubai or Bahrain, said Akbar Torkan, head of Pars Oil&Gas Company (POGC), the state outfit responsible for the offshore field's development.
Torkan said the fund proposal followed the withdrawal of France's Societe General from a financing package for development of Phases 17&18 of South Pars. "SocGen has stopped their financial support because of pressure from the US," he said.
The government stepped in with a $720 million contribution from its strategic contingency fund, but the overall cost of the project was $5 billion, he said. "There areno sanctions against an investment fund," he said.
Societe General officials could not be contacted for comment, but the French bank has in the past played a leading role in financing Iranian projects.
The fund will guarantee a minimum 8% rate of return by the National Iranian Oil Company, rising to 15.9% in some cases, Torkan said.
No European bank is "ready to prepare new financing for us. The US is putting pressure on all European banks", he said.
Some French and European banks continue low levels of work in Iran such as Banque BNP Paribas, which is acting as adviser to Total for the Pars LNG project, but most are cautious.
Previous US efforts to pressure international institutions to stay away from Iran have failed, but European governments have, since the December 2006 UN Security Council resolution over Iran's nuclear programme, tended to support the US sanctions efforts. International oil companies such as Norway's Statoil, France's Total and Shell are also believed to have put the brakes on new project proposals.
In the latest US drive in Europe, the US Treasury's top anti-terrorism official Stuart Levy visited Zurich this week to warn Swiss banks not to do business with Iran.
"We came to offer new information to Swiss bank executives to make them aware of the risks to their reputation they could ruin by maintaining financial relations with Iran," he said.
© Upstream 2007
