China wins Iranian contract to drill in the Caspian region

Iran: China’s lower bids when compared to the Europeans’ helped them clinch the deepwater deal

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By  Jyotsna Ravishankar Published  February 7, 2006

Sending a strong signal to China of continuing co-operation, Iran has invited China Oilfield Services Limited (COSL) to drill deep in the Caspian region. The Chinese company will be paid not only to drill in the 700-metre deep waters, generally considered by upstream experts as beyond Iran’s technical capabilities, but will train Iran’s North Drilling Company (NDC) staff over the next three years. “The deal will be for three years and be worth some US $34 or $35 million,” NDC managing director Heydar Bahmani told state television. An international tender was held with participation from western companies, but COSL, due to reasonable prices and China’s enthusiasm to co-operate with Iran, was selected, he said. Bahmani added that Iran-China co-operation in all areas, notably energy, is on the rise. He said that the Chinese company is also ready to provide Iran with additional services in implementing the project; hence the contract value may increase in the future. COSL will also be responsible for maintenance, repairs, and management of a semi-floating Iran-Alborz platform to be set up in the Caspian Sea for a three-year period. The Chinese ambassador to Iran, Lio G Tan, also present in signing ceremonies, said that Iran has taken a major step in excavation in the Caspian Sea. Tan added that the contract value is relatively low compared to other bilateral agreements, but it is important for Iran to take a step in this area. China’s booming economy gets some 12% of its oil imports from Iran, and several of its companies are active in the Islamic Republic’s hydrocarbons sector. China is also looking to buy liquefied natural gas from Iran after 2009 and develop the giant Yadavaran oilfield. Beijing is keen that an international dispute over Tehran’s nuclear technology should be solved outside the UN Security Council, where sanctions could be imposed. Chinese foreign ministry spokesman Kong said Iran’s nuclear case should be settled through negotiations and diplomatic channels, as “there could be no other better solution to this problem.”

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