August 24, 2005
TEHRAN -- A private Iranian oil company linked to the US oil giant Halliburton has lost a multimillion-dollar contract to drill for natural gas amid accusations that it won the deal through bribery, officials said on Tuesday.
"It was recognized that there was financial corruption by Oriental Oil Kish, so according to the law the decision was made to dismiss the company from its activities," National Iranian Oil Company (NIOC) official Mohammad Reza Moghaddam told the student news agency ISNA.
The $310-million deal was awarded in January, even though a US law introduced in 1996 threatens sanctions on both American and foreign companies investing more than $40 million in Iran's energy sector.
The managing director of Pars Oil and Gas Company (POGC) - the body that supervises the South Pars gas field in question - confirmed the report.
"We have sent the cancelation of the contract with Oriental Oil Kish to NIOC and we are awaiting the decision on a new contractor," Akbar Torkan said.
Another report said that a rival to Oriental Oil Kish, the state-run National Iranian Drilling Company, had been offered the contract.
In early January the POGC awarded the contract for drilling South Pars phases 9 and 10 to Oriental Oil Kish.
Iranian officials said at the time that Halliburton had not directly signed the contract but that it had offered its services via Oriental Kish.
Halliburton, once chaired by US Vice-President Dick Cheney, has also come under investigation in the United States for its dealings with Iran.
Iran, which is OPEC's second largest oil exporter, has the world's second largest gas reserves.
Phases 9 and 10 of South Pars, operated jointly by South Korean and Iranian companies, are expected to produce 50 million cubic meters (1.8 billion cubic feet) of natural gas, 80,000 barrels of condensates and 400 tons of sulfur a day.
Iran hopes to boost gas output from 110 billion cubic meters a year in 2000 to 292 billion cubic meters in 2010. Gas accounts for about one-third of Iran's domestic energy consumption.