Norway's Statoil, which is nearing the end of its offshore contract at Iran's giant South Pars gas field, is considering taking on a new project involving a scheme to reduce associated gas flaring at Kharg island.
The project may attract a loan from the World Bank, according to a senior Iranian official. A Norwegian source said the scheme would come under the United Nations umbrella.
The proposal is in its early stages and no agreement as such has yet been signed, Statoil said.
If the scheme, using Statoil's low flaring technology for the so-called Clean Development Mechanism (CDM) under the Kyoto agreement, goes ahead, it would help set against the Norwegian company's carbon dioxide quotas elsewhere.
Iran itself has long been making efforts to cut down associated gas flaring and obtained a substantial World Bank loan in the early 1990s for the Doroud project, based on Kharg. The loan was suspended in 1994 under US pressure.
The latest flaring reduction scheme is linked with the Kharg associated gas gathering and natural gas liquids (NGL) project, according to deputy oil minister Hadi Nejad Hossainian.
Statoil is interested in investing in Kharg, he said, because it would cost the company more to carry out an equivalent CDM scheme in Norway.
The deputy minister indicated the World Bank loan would involve $500 million and would be over 10 years.
Kharg NGL is a $1.3 billion project belonging to Iranian Offshore Oil Company (IOOC), which opened a new tender round in April after two years of abortive tendering. The work will be carried out on a super turnkey basis involving engineering, procurement, construction, installation, commissioning and start-up of associated gas gathering, NGL recovery and export facilities, IOOC said.
The EPIC job involves two processing plants with an aggregate capacity of 600 million cubic feet per day for gathering, storing and exporting associated natural and liquefied gas from oilfields in and near Kharg.
Two groups made up of France's Technip and South Korea's Daewoo with Nargan of Iran, and UK-based Costain with Iran's Sazeh Consult and Sadra submitted bids in the previous of a series of tenders in October.
Japan's JGC was low bidder for the contract three years ago, but withdrew in early 2004 because of rising costs. Technip stepped in to take its place later in the year but had second thoughts last year. At various stages, Kawasaki, Parsons UK and ABB had also expressed interest.
By VAHE PETROSSIAN
© Upstream 2006
