Deal to develop Iranian oil field disappoints State Department

by The Associated Press

A consortium made up of Canada’s Bow Valley Energy Ltd. and Elf Petroleum Iran has agreed to develop Iran’s offshore Balal oil field. The cost of the project is estimated at $300 million, and the first oil from Balal — some 40,000 barrels a day — is expected in 2001.

The U.S. State Department said April 5 that it is “deeply disappointed” about the decision to develop Balal.

“The U.S. remains strongly opposed to investment in Iran’s petroleum sector,” State Department spokesman James P. Rubin said. “We have repeatedly urged the governments of France and Canada at the most senior levels to discourage this investment.”

Rubin said the administration will review the facts to determine whether U.S. sanctions could be applied against the two companies.

Balal is 60 miles southwest of Lavan Island in the Persian Gulf. Reserves there are estimated at 100 million barrels of “good quality oil,” France’s Elf Aquitaine said in a statement April 4.

Elf Petroleum Iran is a subsidiary of Paris-based Elf Aquitaine.

The consortium is to be reimbursed and paid in crude oil in the six-year contract with Iran’s national oil company, the statement said.