NFS partner resumes oil drilling ops in Iran

By Thomas Wilson
STAR STAFF
twilson@starhq.com

  
An international energy conglomerate with partnership ties to Nuclear Fuel Services, Inc. has announced recommencement of oil drilling operations in the southwest region of Iran.
   Lundin Petroleum announced Thursday it had recommenced oil drilling on the Munir Block in Iran on April 10. Located in the Khuzestan province, the Block is located within the Zagros Basin where over 150 billion of barrels of oil have been discovered to date.
   The block is operated by Edison Gas, which owns a 40 percent interest along with partners Petronas Carigali Overseas and Lundin Petroleum, which each own a 30 percent interest. The block was awarded to Edison International in January 2001 under a four-year agreement (buy-back contract) with the National Iranian Oil Corporation (NIOC). Edison assigned a 40 percent interest to Lundin Petroleum, which was approved by NIOC on Sept. 26, 2001.
   The work obligation consists of geological mapping, gathering seismic data and the drilling of three exploration wells over the next four years. The company reported that barring further operational delays the well will reach its target depth by the end of June 2004.
   Lundin Petroleum is a subsidiary of the Lundin Group of Companies, a Stockholm-based corporation that owns international oil interests around the world including Iran and Indonesia. Lundin Companies also own the International Uranium Corporation (IUC), which has a partnership with NFS. The two companies announced in November of 2002 a 50/50 joint venture company called Urizon Recovery Systems, LLC, to pursue the development of a new, long-term, alternate feed program for the IUC's White Mesa Mill in Utah.
   Urizon is pursuing the development and construction of a plant at NFS' facility in Erwin for the blending of contaminated low enriched uranium with depleted uranium to produce a natural uranium ore, or "USM Ore," a trademarked brand of uranium. The USM Ore will then be further processed at the IUC's White Mesa Mill to produce conventional yellowcake.
   According to an IUC status report issued Jan. 29, both companies were re-evaluating whether to pursue the project under an alternative agreement given the recent increases in the price of uranium. A preliminary report by the DOE released in 2000 stated there were 4,700 metric tons of contained surplus low enriched uranium at 28 sites across the DOE Complex, which would yield approximately 15 million pounds of yellowcake as well as other sources of materials suitable for the program.
   According to Lundin's 2004 spending layout, the company budgeted $34 million for exploration including drilling of eight wells in Iran, the Aquitaine Basin in France, as well as sites in the Netherlands, Indonesia, Norway and Venezuela.
   Lundin Petroleum's development budget for 2004 was $110 million. The development program is primarily focused on the development of the Broom field, an offshore United Kingdom oil field due to come on stream in the second half of 2004.
   Other development sites budgeted include commencement of the Alvheim development offshore Norway and further development drilling and workovers on existing oil-producing fields in Venezuela, France, Indonesia, the Netherlands, Norway and United Kingdom to enhance existing production.
   The NIOC is wholly owned by the Iranian government. The U.S. Treasury Department has allowed two American companies, Chevron and Coastal, to import Iranian crude oil.
   Prior to the NIOC's existence, Anglo Persian Oil Company held oil exploration and concessions in Iran. Anglo Persian Oil Co. was replaced in 1954 by Iranian Oil Participants Limited, a joint venture of numerous petroleum companies that included British Petroleum, Texaco and Socal, Gulf, Royal Dutch/Shell Group, Atlantic Oil and Getty.
   Lundin Petroleum together with partners OMV (Sudan) Exploration, Petronas Carigali and Sudapet owned an oil field in Sudan known as Block 5A. The consortium ceased operations at Block 5A in January of 2002 after ongoing rebellion against the existing Islamic and military-dominated Sudanese government created instability near the block.
   On July 20, 2002, the Government of Sudan and the main rebel group known as the Sudan People's Liberation Movement signed a preliminary peace agreement known as the Machakos Protocol. The agreement was reached at the end of one month's talks that took place in the Kenyan town of Machakos southeast of Nairobi under the auspices of IGAD (Inter-Governmental Authority on Development) and in the presence of observers from Britain, Italy, Norway, Switzerland and the United States.
   The consortium announced in March of 2003 they would resume work on the existing infrastructure within Block 5A and the equipment stored in the Rubkona base camp, as a first step towards an eventual recommencement of activities. However, Lundin ultimately sold its 40 percent interest in Block 5A for $142.5 million one month later.