Iran, Malaysia Sign $16 Billion Gas Deal

The National Iranian Oil Company (NIOC) and Malaysia‘s SKS Ventures have signed a series of gas deals on Wednesday amounting to a total of $16 billion, the Arabian Business news portal reported.

$6 billion will be invested in developing two Iranian gas fields – Golshan and Ferdows, which have an estimated 50 to 70 trillion cubic feet of gas reserve in total. Other deals will concentrate on producing liquefied natural gas (LNG). 

According to a letter of understanding signed on January 7, 2007, SKS Ventures committed to carry out studies on the development of Golshan and Ferdows.

The Malaysian party is to invest $5 billion to produce 20 million tons of LNG in the upstream sector and $10-11 billion in the downstream sector. The Malaysian company’s investment will be reimbursed through buy-back scheme in the form of gas output ready for liquefaction.

The United States finds it difficult to persuade foreign companies not to invest in Iran. Two weeks ago, China‘s Sinopec announced a $2 billion contract to develop Iran‘s Yadaravan oil field.  

Earlier this year, a few weeks after SKS had signed the letter of understanding with NIOC, chairman of the foreign affairs committee in the U.S. House of Representatives, Tom Lantos, described the move as a "disturbing development" which required "swift action by the administration".

Lantos demanded that talks with Malaysia over the Free Trade Agreement be suspended. Malaysia‘s Prime Minister ‘Abdullah Ahmad Badawi announced Malaysia was a sovereign country and would not backtrack on the deal.