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Russia: Iran Reveals Energy Deals Ahead Of Khatami's Moscow Trip

Iran announced a series of petroleum deals with countries other than Russia in the days before President Mohammed Khatami's visit to Moscow this week. The message seems to be that Tehran has other options to pursue if relations over the Caspian Sea prove difficult. Our correspondent Michael Lelyveld reports.

Boston, 12 March 2001 (RFE/RL) -- Iran has publicized a series of important oil and gas deals with foreign countries on the eve of President Mohammed Khatami's visit this week to Russia, signaling that Tehran will not increase its reliance on Moscow.

On 9 March, Iran announced a $226 million agreement with GVA Consultants of Sweden to build an oil rig on a submersible platform for exploring the Caspian Sea. The contract with the Swedish subsidiary of British Maritime Technology represents a major investment for Iran and its first venture to develop its offshore Caspian resources.

The move came just three days before Khatami's trip to Moscow, where talks were expected to focus on the Caspian's legal status. But the deal seemed to underscore Iran's determination to pursue its interests despite continuing doubts about Caspian legal issues.

Commenting on the contract, Iranian Oil Minister Bijan Namdar Zanganeh said, "We had to start oil exploration activities because others have started, and we don't want to be left behind."

The agreement to build the huge rig on the Caspian also seemed to be the first sign that Tehran plans to acquire Western technology for its own exploration of the Caspian. In previous efforts to develop pipelines and facilities for Caspian oil swaps with Kazakhstan and Turkmenistan, Tehran wasted three years in negotiations and financing problems with Chinese firms before reaching a workable deal.

But last week's Caspian announcement was only the first of three in Iran's petroleum sector in the days before Khatami's trip to Moscow.

On 9 March, Iran also signed a deal in Singapore with a group of Japanese banks and oil trading companies that will give Tehran advance payments of 360,000 million yen, or $3 billion, for its oil exports to Japan. The Tokyo daily newspaper "Yomiuri Shimbun" said the agreement may help Japan win the right to develop Iran's giant Azadegan oil field, one the biggest discoveries in recent years. The first installment of $1 billion is expected to be made shortly.

On Sunday, the "Iran News" also reported that the country's Petropars company will sign a contract valued at $2.6 billion with Britain's Enterprise Oil to help develop the South Pars gas field in the Persian Gulf, one of the world's largest deposits. The agreement is for Phases 6, 7, and 8 of the multi-stage development. While the award to the British firm was previously publicized last December, the announcement appears to mark Iran's official approval of the deal.

The newspaper said another announcement is expected this week on the winner of a competition for Phases 9 through 12. The involvement of Russia's Gazprom in early stages of South Pars development since 1998 raised speculation that the Russian role in Iran's oil sector might grow. But Russian investment has been slow to materialize, while Iran has been careful to avoid Russian control.

The flurry of foreign activity in Iran's oil sector also highlights the country's importance at a time when it might otherwise be seen on the defensive.

Late last month, a Caspian summit meeting in Turkmenistan was postponed from March until April at Khatami's request after it appeared that Iran was heavily outnumbered on the legal question of how to divide the waterway among the five shoreline states.

Russia has been on the offensive over the issue, pushing its formula for splitting the seabed into national sectors while keeping the water and its surface in common. Iran has insisted on an even 20 percent share of the entire Caspian, more than its shoreline would entitle it to.

After Moscow persuaded Kazakhstan and Azerbaijan to follow its lead, there were hints that Turkmenistan might be won over as well. But Iran has stuck to its 20 percent claim.

The official news agency IRNA quoted Iranian Deputy Foreign Minister Ali Ahani yesterday (11 March) as saying that in the course of talks between Khatami and Russian President Vladimir Putin, Iran will reiterate its 20 percent share of the oil-rich Caspian Sea resources.

The stand suggests the Caspian accord will be limited in scope or interpretation, unless Russia and its neighbors agree to adjust their shares in order to give Iran its 20 percent. In the meantime, Iran's series of oil announcements with countries other than Russia suggests that it could have many potential partners in pursuing its Caspian interests.