Russ Oil-Gas

19 February 2008 - Upstream OnLine - Russia's Gazprom is set to develop more phases of Iran's giant South Pars gas field and enter the country's oil sector, it said today. Gazprom said in a statement s it clinched the deal today during talks with company boss Alexei Miller and Iran's Oil Minister Gholamhossein Nozari. It did not give any figures for investment commitments. "The two sides have agreed to jointly develop two or three blocks of South Pars as well as Gazprom Neft's participation in oil production projects in Iran", the statement said. Gazprom is already involved in phases two and three of South Pars together with France's Total and Malaysia's Petronas. "In today's negotiation, agreements for the joint development of two phases of South Pars, development of oilfields and setting up a joint company between Iran and Russia's Gazprom have been almost finalised," Nozari was quoted by ISNA news agency as saying. The minister said working groups had been set up to "finalise talks within two months and we move in the direction of signing agreements". He added: " Gazprom has expressed a desire to be present in the upstream sector and also (liquefied natural gas) projects." At least one LNG unit would use gas from two phases of South Pars, Nozari said. Russia has been reluctant to impose more United Nations sanctions on Iran although it has voiced some concerns about Tehran's nuclear ambitions. Russia is building Iran's first nuclear power plant and has supplied the fuel it will use, despite U.S. concerns that Tehran is seeking to build atomic bombs. Iran denies any such intentions. Iran produces 100 billion cubic metres of gas per year, less than a fifth of Gazprom's production of 550 Bcm, but has ambitious plans to boost output further mainly due to larger output from South Pars, believed to be the world's largest gas field. The agreement takes place as Iran is calling on Russia to set up an Opec-style gas cartel, an idea that has sent jitters among top customers and politicians in Europe. Moscow says better co-ordination is needed between key gas producers and consumers but rebuffs the idea of a cartel which would influence prices.