Iran Gives Gas Field Orders To Local Cos-Spokesman

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LONDON -(Dow Jones)- Iran Tuesday gave domestic companies contracts worth $21 billion to develop a giant gas field, awarding some works to a group tied to the Revolutionary Guards after failing to sign with Royal Dutch Shell PLC (RDSA: undefined, undefined, undefined%) and Repsol YPF SA (REP: 21.94, 0.3, 1.39%).

Iran said the deals proved it can shrug off international pressure over its controversial nuclear program after the United Nations agreed new sanctions. But experts doubt the domestic companies will be able to deliver the projects without the help of foreign majors.

Contracts to develop six phases of the South Pars gas field were signed Tuesday in the presence of President Mahmoud Ahmadinejad, a spokesman for the Pars Oil and Gas Co., or POGC, which oversees the development, said.

He said contracts to develop phase 13 and 14, for which Shell and Repsol had been in talks, were given to Iranian companies.

The two energy majors have held off for years on a final decision amid rising international pressure. Spokesmen for POGC, Shell and Repsol declined to comment on whether they had pulled out of the talks.

The deals may signal tighter control on the oil industry by companies connected to Iran's conservatives.

Marine services company Sadra, which is tied to the Iranian Revolutionary Guard Corps, was part of consortia that won phase 13--for which Repsol and Shell had been in talks--along with three other phases.

Last year, a consortium led by Khatam al-Anbiya, the IRGC's engineering arm, agreed to buy 51% in Sadra.

Khatam al-Anbiya was targeted under the new sanctions imposed by the U.N. Security Council Wednesday. Sadra itself wasn't named in the sanctions.

Created during the Iran-Iraq war of the 1980s to help rebuild the country, Khatam al-Anbiya has made headway in recent years in the oil industry. It has signed up for the development of phases 15 and 16 of South Pars along with oil exploration works and petrochemical plants, according to its website.

The decision comes after Ahmadinejad last year got a former Revolutionary Guard, Masud Mirkazemi, appointed as oil minister, and loyalist Ahmed Ghalebani was named head of the National Iranian Oil Co. in April.

Ahmadinejad said the deals were evidence Iran can shrug off the impact of sanctions by working without Western companies. "Today, we see [Iranian] contractors with daring and self-reliance shouldering the burden," he was quoted as saying by the Shana news agency.

But experts doubt Iranian companies are equipped to handle projects involving such large-scale and technologically challenging projects on their own.

"They don't have the capacity in terms of technology, personnel and capital," said Mehdi Varzi, a former Iranian oil official and president of consultancy Varzi Energy.

"Iran needs Western oil companies" as they best master technologies in offshore fields and liquefied natural gas plants, he said.

Iran has the world's second-largest reserves of natural gas, which includes the South Pars field the country shares with Qatar. But their development has been delayed amid a lack of investment in a country faced with severe gas needs of its own and the impact of sanctions.

European Union foreign ministers examined Monday how they can go further than new U.N. sanctions in putting pressure on Iran to stop its nuclear program.

The international community suspects the country is seeking to develop nuclear weapons, but Iran insists its nuclear program is purely for civil energy uses.