DNI-NEWS Digest - 1 Jun 1998 to 2 Jun 1998

There are 9 messages totalling 689 lines in this issue. Topics of the day:

1. Iran rebels say responsible for deadly blast 2. Rebels claim blast at Iran court, two dead 3. Iran deputies to quiz minister over Murdoch visit 4. Shell ups interest in Iran after sanctions waiver 5. Shell reopens gas talks with Iran 6. FOCUS-Iran sees bright future for oil investment 7. Iran says Pakistan N-tests counter Israel's bomb 8. Western oil firms prepare for return to Iran 9. PRESS DIGEST - Iran - June 2


Iran rebels say responsible for deadly blast

Iran rebels say responsible for deadly blast

DUBAI, June 2 (Reuters) - An Iraq-based Iranian armed opposition group claimed responsibility for an explosion on Tuesday which it said killed and injured dozens of people at a court in Tehran.

``In a bombing...at the Islamic Revolutionary Court, dozens of the regime's interrogators and torturers were killed and injured,'' Mujahideen Khalq spokesman Farid Soleimani told Reuters by telephone from Baghdad.

Soleimani said the operation was in response to the killing of eight Mujahideen Khalq fighters in clashes with Iranian government forces in western Iran in November.

``The Mujahideen's operational forces returned safely to their bases after the operation,'' he said.

Earlier, Iranian state television said two people were ``martyred'' and two injured in the explosion. Analysts said the use of the word ``martyred'' suggested that the explosion could have been caused by a bomb but there was no official confirmation.

The television said the blast, which occurred at the reception area at the court, also caused damage to the three-storey building in north Tehran and smashed windows. 11:49 06-02-98

Copyright 1998 Reuters Limited. All rights reserved.

Rebels claim blast at Iran court, two dead

FOCUS-Rebels claim blast at Iran court, two dead 12:57 p.m. Jun 02, 1998 Eastern

TEHRAN, June 2 (Reuters) - An explosion killed two people and injured two others at an Islamic revolutionary court in Tehran on Tuesday, Iranian state television said.

In Baghdad, the Iraq-based Iranian armed opposition group Mujahideen Khalq said its forces inside Iran were responsible for the blast.

State television said: ``In an explosion at the Tehran Islamic revolutionary court two people were martyred and two people were injured.'' It added that the cause of the blast was being investigated.

Analysts said the use of the word ``martyred'' suggested that the explosion could have been caused by a bomb but there was no official confirmation.

Mujahideen Khalq spokesman Farid Soleimani told Reuters in Dubai by telephone from Baghdad: ``In a bombing...at the Islamic revolutionary court, dozens of the regime's interrogators and torturers were killed and injured.''

Soleimani said the operation was a response to the killing of eight Mujahideen Khalq fighters in clashes with Iranian government forces in western Iran in November.

``The Mujahideen's operational forces returned safely to their bases after (Tuesday's) operation,'' he said.

The television said the blast, which occurred in the reception area of the court, also caused damage to the three-storey building in north Tehran and smashed windows.

It showed piles of rubble, shattered computers and office equipment and heaps of mangled metal.

``Investigations continue into the cause of this incident,'' the television said.

The official news agency IRNA said earlier that three people were injured in the blast, which it blamed on negligence during the handling of explosives being used as evidence in a case.

Witnesses earlier said there were many casualties from the blast, which occurred at about 1:45 p.m. (0915 GMT) when the court building was crowded. ``I saw tens of ambulances carrying 60 to 70 people,'' one witness said.

Revolutionary courts were set up after Iran's 1979 Islamic revolution to deal with political and other crimes according to laws based on the Moslem sharia legal code.

Iran has blamed the Mujahideen Khalq for cross-border raids from Iraq and bombings. Tehran welcomed a U.S. government measure last year designating the group as ``terrorist.''

The Mujahideen has denied attacking civilians but has claimed responsibility for hitting military, economic and state targets.

A large bomb in 1994 killed 26 people at a Shi'ite Moslem shrine in the northeastern holy city of Mashhad. Iran blamed the Mujahideen, but the group denied responsibility.

Iran deputies to quiz minister over Murdoch visit

Iran deputies to quiz minister over Murdoch visit 06:57 a.m. Jun 02, 1998 Eastern

TEHRAN, June 2 (Reuters) - A group of Iranian deputies has summoned Iran's foreign minister to be questioned in parliament over a visit by media mogul Rupert Murdoch, whom they blasted as a ``pillar of Zionism,'' newspapers said on Tuesday.

The daily Jomhuri Eslami said the five conservative deputies also said Foreign Minister Kamal Kharrazi should explain recent visits by two American Middle East analysts.

The move was the latest in a series of public spats between conservatives and supporters of moderate President Mohammad Khatami, who has called for increased cultural and scientific exchanges to promote a dialogue with the American people.

``We have recently witnessed the presence in Iran of American citizens, particularly political and security elements,'' the deputies said in their query.

They objected to the visit by Australian-born Murdoch, blasting him as ``one of the main pillars of Zionism and a leader of cultural invasion.''

Foreign ministry officials were quoted earlier by the daily Kayhan as saying Murdoch had visited Iran last month on a tourist visa. They gave no further details.

Iran has banned satellite dishes for public use, blaming Western television channels for a ``cultural invasion'' against the Islamic republic.

The newspapers said the deputies were also referring to recent visits by Anthony Cordesman and Judith Kipper. Cordesman works as a Middle East military analyst at the Washington-based Centre for Strategic and International Studies. Kipper is also a U.S. Middle East analyst.

Since Khatami's election last year, U.S.-Iran ties have warmed slightly.

An Iranian official last week welcomed the steady stream of American scholars and journalists who have visited Iran recently, saying they had contributed to transforming Iran's image positively in the United States. REUTERS

Shell ups interest in Iran after sanctions waiver

Shell ups interest in Iran after sanctions waiver 09:46 a.m. Jun 01, 1998 Eastern

By Steven Swindells

DUBAI, June 1 (Reuters) - Powerful oil firms are expected to refocus on Iran's oil and gas potential after a critical decision by the United States to waive punitive sanctions against a foreign-led gas project in the Islamic Republic.

The latest indication of strong potential overseas interest in Iran came on Monday with news that giant Royal Dutch Shell Group was moving to revive dormant plans to develop Iran's huge North Pars gasfield.

A Shell spokesman confirmed a report in industry newsletter Middle East Economic Survey (MEES) that the world's largest private sector oil company had held talks with state-owned National Iranian Oil Company (NIOC) on the North Pars structure.

``We can confirm we recently have had preliminary discussions on development of North Pars,'' the spokesman said.

Shell is expected to carry out a year-long study on the project, building on an extensive survey it did in 1993 which did not lead to a definite deal because of disagreement over how the Anglo-Dutch firm would be paid for investment.

Industry analysts estimate that North Pars, 15 km (nine mile) off the Iranian coast and with reserves of some 47 trillion cubic feet, could cost around $2 billion to develop over a five to seven year development programme.

Shell's interest in North Pars is in addition to its active pursuit of a stake in a consortium seeking to develop the neighbouring South Pars field as the source of a project to export gas to Pakistan through a 1,600-km (1,000 mile) pipeline.

The company will send a strong contingent to the launch in London in early July by NIOC of an international tender for upstream projects.

For Iran, North Pars will supply the vital gas needed to be reinjected into its ageing onshore fields which are ebbing after decades of heavy production of more than three million barrels per day (bpd).

The gas is needed to ensure that Iran retains its position as the world's third largest exporter behind Saudi Arabia and Norway and win its battle to keep supplying strong domestic petroleum demand growth.

For Shell, North Pars would allow access to the world's second largest gas deposits which have been shutoff from foreign firms since Iran's turbulent 1979 revolution.

The news on Shell's move came just weeks after an agreement by the United States and European Union to waive U.S. sanctions on French, Russia and Malaysian firms already signed up with NIOC to develop the huge South Pars gasfield.

The Iran-Libya Sanctions Act (ILSA), passed by a Republican-dominated Congress in 1996, required the president to impose a range of sanctions against foreign firms that invest more than $20 million a year in Iran's oil and gas industry.

Clinton, on signing ILSA, said the act was needed to deny Iran the ability to fund international terrorism and its desire for weapons of mass destruction, charges which Iran denies.

But the European Union had strongly objected to attempts to apply U.S. national laws extra-territorially and threatened the U.S. with World Trade Organisation arbitration if it did not agree to waive the sanctions.

EU external trade Commissioner Sir Leon Brittan said the waiver would include future projects in Iran specifically involving Shell and British Petroleum Plc.

The waiver came just weeks before NIOC is scheduled to offer international firms a host of projects, following on from a similar offering in 1995 which culminated in Total SA, Petronas and Russian Gazprom agreeing to develop South Pars.

``We've always thought our position was justified...now with the waiver we are in a cleaner and clearer position to move ahead,'' Total vice president Georges Buresi said.

Despite expected lengthy negotiations over commercial and technical aspects of these projects -- not least how foreign firms can be guaranteed repayment when the country's constitution rules out equity rights -- Iranian officials are confident of a rush of foreign oil executives to Tehran.

``I see a very promising future,'' Iranian deputy oil minister Mehdi Hisseini said.

Shell reopens gas talks with Iran

Shell reopens gas talks with Iran - report 03:43 a.m. Jun 01, 1998 Eastern

NICOSIA, June 1 (Reuters) - Royal Dutch Shell Group has reactivated talks with the National Iranian Oil Company (NIOC) to develop Iran's North Pars offshore gasfield, the Middle East Economic Survey (MEES) reported on Monday.

The report comes just weeks after an announcement that the United States had agreed with the European Union to waive U.S. sanctions on European, Russian and Malaysian firms involved in a $2 billion phased development of Iran's neighbouring South Pars gasfield.

``MEES understands that Royal Dutch-Shell has reopened discussions with NIOC regarding the development of the offshore North Pars gasfield,'' the Cyprus-based newsletter reported.

``As a next step in its North Pars development efforts, Shell has proposed a follow-up study, to be undertaken in conjunction with NIOC,'' MEES reported.

North Pars could cost up to $2 billion to tap its gas reserves of some 47 trillion cubic feet, industry sources said.

MEES reported in April that Shell had decided to actively pursue oil and gas business opportunities in Iran including the go-ahead to draw up a framework contract to further develop the export-orientated South Pars gasfield which holds 321 trillion cubic feet of gas.

Shell Group Managing Director Mark Moody-Stuart responded to that report by saying the Anglo-Dutch firm had always had an interest in Iran and would continue to talk to the Islamic Republic.

Gas from North Pars, located 15 km (nine miles) off the Iranian coast, would be primarily re-injected into Iran's ageing onshore oil fields which need additional gas pressure to lift oil output and prolong field life.

These fields are seen as critical if Iran is to retain its position as the world's third largest oil exporter after Saudi Arabia and Norway, industry sources said.

The follow-up study, which could take as long as a year to complete, would decide which onshore fields would benefit most from a re-injection of gas from North Pars.

Shell carried out an extensive joint study on North Pars in 1993 but talks on developing the giant field reached an impasse in 1994 over how Shell would be paid for its investment.

Another issue that would have to be resolved before the project left the drawing board would be how Shell would be paid for its investment as the Iranian constitution rules out any foreign equity ownership of its oil and gas reserves.

Though North Pars has large gas reserves the field contains a low ratio of associated light oil known as condensates which under previous plans would be the source of Shell's remuneration for its investment.

Shell's previous North Pars development was based on three production modules, each with a capacity of 1.2 billion cubic feet a day.

``Sour gas from the first 1.2 billion cubic feet a day of production phase was to be used for gas injection into the Gach Saran, Bibi Hakimeh and Binak oilfields while output from the second and third phases...to undefined domestic or export markets,'' MEES reported.

Iran is expected next month to offer a host of oil and gas development projects worth potentially billions of dollars.

Iran has pressed ahead with its offer against the background of the 1996 U.S. Iran-Libya Sanctions Act (ILSA) which has the potential to slap sanctions on foreign firms that invest more than $20 million a year in Iran's energy sector.

Foreign firms, notably France's Total SA, have ignored the threat of sanctions and signed up ``buy-back'' deals with NIOC to develop Iranian oil and gas fields.

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FOCUS-Iran sees bright future for oil investment

FOCUS-Iran sees bright future for oil investment 09:01 a.m. Jun 01, 1998 Eastern

By Raj Rajendran

KUALA LUMPUR, June 1 (Reuters) - The longer term development of Iran's oil and gas industry can get back on the fast track now, but short term the country was worried about stubbornly low oil prices, Iranian deputy oil minister Seyed Mehdi Hosseini said on Monday.

``I see a very promising future,'' he said on the sidelines of an oil conference, after the United States relaxed its tough sanctions policy against investment in Iran.

He said the relaxation could release pent up investment in Iran, the world's third biggest crude exporter after Saudi Arabia and Norway.

Hosseini said Iran's onshore and offshore oil and gas fields were open to foreign investment, adding the country was in talks with several foreign companies on new investments.

Earlier this month, the U.S. announced that it would waive sanctions against a consortium that had agreed to develop the giant $2 billion South Pars gas field in Iran.

The consortium comprised France's Total SA, Malaysia's Petroliam Nasional Bhd (Petronas) and Russia's Gazprom.

Analysts saw the move as a relaxation of the U.S. Iran-Libya Sanctions Act, signed in 1996, which punishes companies that invest at least $20 million per year in Iran.

Earlier on Monday, Shell separately confirmed it was holding talks with the National Iranian Oil Co (NIOC) to develop the North Pars gas field.

Shell had carried out a study of the field in 1993 but talks on its development reached an impasse in 1994. ILSA added another layer of uncertainty about involvement in the field.

But while Iran was looking for investment in the country to develop its hydrocarbon reserves, it was also looking to expand overseas.

He confirmed that Iran was in talks with South Korea's 275,000 barrels-per-day Hanwha Energy Co Ltd to buy a controlling stake in the refiner.

Hanwha Energy was put up for sale late last year as South Korea suffered its worst economic crisis in years.

The company operates the smallest refinery in South Korea and returned a net loss in calendar 1997 of 58.16 billion won, versus a year-earlier profit of 5.68 billion.

Last week, Hanwha said it was signing a contract to sell its power generator division to AES Corp. of the U.S. for $874 million.

Iran relies on oil sales for 80-percent of its hard currency earnings and by 40 percent for government revenues, making the development of its oil and gas fields a major plank for the futures of the economy.

But short term Iran, and its fellow members of the Organisation of the Petroleum Exporting Countries (OPEC), were facing low oil prices, cutting back dollar earnings, Hosseini said.

He said he was sure OPEC would agree to cut production later this month if the oil group considered it necessary as a way to bolster oil prices.

``If necessary to have production cuts, I'm sure they (OPEC) would come to such a decision,'' he told reporters.

``We are very concerned with the low oil price. OPEC will do its best to support oil prices,'' he said.

Hosseini said Iran had already implemented a production cut of 140,000 barrels per day (bpd) as agreed in late March with OPEC.

``We have cut based on what we have agreed,'' he said.

In March, OPEC agreed to cut production 1.245 million bpd to support prices, which were languishing around nine-year lows.

Non-OPEC producers agreed to support OPEC, deepening the overall cuts to around 1.5 million bpd.

But since the decision to cut was made, oil prices have remained stubbornly low and several OPEC countries have said they would support further cuts if prices do not improve before the June 24 meeting of OPEC in Vienna.

-- Kuala Lumpur newsroom (+603-275-6839) fax (+603-232-6752) REUTERS

Iran says Pakistan N-tests counter Israel's bomb

Iran says Pakistan N-tests counter Israel's bomb 11:13 a.m. Jun 01, 1998 Eastern

ISLAMABAD, June 1 (Reuters) - Iranian Foreign Minister Kamal Kharrazi said on Monday Pakistan's nuclear capability would counter Israel's atomic arsenal and make Moslems more confident.

Moslems ``now feel more confident that Pakistan's nuclear capability would play a role of deterrence to Israel's nuclear capability,'' Kharrazi told reporters on arrival at Islamabad.

``Israel is the only country in the Middle East which has a nuclear capability,'' the official APP news agency quoted him as saying.

Many military analysts believe Israel does have a nuclear weapons capability, but the Jewish state will neither confirm nor deny reports that it has some 200-300 nuclear warheads.

Kharrazi's trip was planned before Pakistan's announcement last week that it had exploded six nuclear test devices in response to India's five nuclear tests earlier in May. The tests by the two countries were roundly denounced by the international community.

Moslems worldwide were reported to be happy that Pakistan had achieved a nuclear capability but regretted the tension the tests had generated, Kharrazi said.

``But at the same time, we believe that there should be more restraint in the region and reduction of tension,'' he said, adding that Iran was prepared to help to ease the tension.

Iran has expressed alarm at the nuclear tests and urged Pakistan and India to settle their differences and commit themselves to curbing atomic weapons.

Iran launched a nuclear programme in the 1970s but slowed it after the 1979 Islamic revolution.

Experts say it could accelerate the programme now -- but that it would still be a longer term project.

Kharrazi said Tehran's nuclear programme was for peaceful purposes only and was open to regular inspection by the International Atomic Energy Agency.

Pakistani Foreign Minister Gohar Ayub Khan said he and Kharrazi would discuss bilateral relations and Afghanistan.

``We would certainly focus on the situation in Afghanistan with a view to promoting intra-Afghan dialogue and a peaceful solution of the conflict,'' Khan said.

Kharrazi said the two countries should take an active role in brokering a solution to the Afghan civil war, Tehran radio quoted him as saying.

In Tehran, meanwhile, Iranian state television said on Monday Iran had found no traces of fallout in a border region near the site of recent Pakistani tests.

It quoted a senior official at Iran's Atomic Energy Organisation as saying a team sent to the region had not detected any radiation after the tests across the border from Iran's southeastern Sistan-Baluchistan province.

``The technical checks of this organisation have so far rejected any possibility of earth or sea pollution,'' the television quoted the official as saying. ^REUTERS@

Western oil firms prepare for return to Iran

Western oil firms prepare for return to Iran 07:53 a.m. Jun 02, 1998 Eastern

By Steven Swindells

DUBAI, June 2 (Reuters) - Western oil firms are pressing to re-open representative offices in Iran as the Islamic republic prepares to open up its strategic oil and gas sector to foreign investment, industry sources said on Tuesday.

British Petroleum Plc, France's Elf Aquitaine, Australia's Broken Hill Pty Co Ltd (BHP) and Russia's Gazprom are the latest firms aiming to move back to Tehran, 20 years after an exodus of foreign firms who packed their bags as the Iranian revolution turned violent.

``These companies want to become very active in Iran,'' said a source at the state-owned National Iranian Oil Company (NIOC).

Iran's upcoming offer of a series of oil and gas development projects worth billions of dollars at an unprecedented seminar in London on July 1-3 is seen as a major factor behind renewed interest in Iran as an important oil play.

The Islamic republic has over 93 billion barrels of proven oil reserves -- nine percent of total world reserves -- and has the second largest deposits of gas at 21 trillion cubic metres.

Equally important has been last month's decision by the United States to waive punitive sanctions against a French-Russian-Malaysian consortium that is ploughing $2 billion in a development of NIOC's huge South Pars gasfield.

The Iran-Libya Sanctions Act (ILSA), passed by a Republican-dominated Congress in 1996, required the president to impose a range of sanctions against foreign firms that invest more than $20 million a year in Iran's oil and gas industry.

The European Union, which fought hard against ILSA on the grounds that it contravened international trade law, expects the waiver on South Pars to apply to other EU firms doing oil business with Iran.

``Sanctions look creaky...business possibilities in Iran are heating up,'' said one executive based in the Gulf with a major international firm.

BP said last month it was opening a representative office in Tehran but would wait for normalised international relations with Iran before resuming business with the Islamic republic.

BP is the largest oil producer in the United States and a major investor and employer there and potentially vulnerable to ILSA.

Other firms are also still closely watching whether ILSA penalties will be imposed on any future deals signed with NIOC.

Elf has eyed a $600 million project to develop the Doroud gas field while Gazprom is committed as a partner in South Pars and has said it is interested in other Iranian projects.

Australia's Broken Hill is studying with NIOC a $2.7 billion project to build a pipeline to supply gas from South Pars to Pakistan ahead of an investment commitment in 1999.

Some foreign oil firms have held on to a presence in the Iranian capital since 1979 but these offices served primarily to keep in daily contact with NIOC to ensure the smooth running on long-term crude supply contracts or oil product imports.

European majors such as Royal Dutch Shell Group together with a host of Japanese and Korean firms such as Idemitsu Kosan Co have long had offices in Iran.

France's Total SA re-opened its representative office after agreeing to develop the Sirri E and A offshore oil and gas fields in 1995. Petronas also opened an office after joining Total at Sirri and becoming part of the consortium developing the second and third stages of South Pars.

PRESS DIGEST - Iran - June 2

PRESS DIGEST - Iran - June 2 02:19 a.m. Jun 02, 1998 Eastern

TEHRAN, June 2 (Reuters) - These are some of the leading stories in Iranian newspapers on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.

TEHRAN TIMES

- Iran's foreign ministry spokesman condemned Israel's attacks on southern Lebanon and calls Israeli offers to withdraw from areas it occupies in south Lebanon in exchange for security guarantees as ``an attempt to divide the ranks of Moslems.''

IRAN NEWS

- Iranian Foreign Minister Kamal Kharrazi said on Monday that Pakistan's nuclear capability would counter Israel's atomic arsenal and boost Moslems self confidence. ``But at the same time, we believe that there should be more restraint and reduction of tension in the region,'' he said.

IRAN DAILY

- Iran's Defence Minister Ali Shamkhani says Iran endorses ridding the Gulf and the Middle East region of non-conventional weapons and opposes the proliferation of nuclear weapons.

- A Sunni Moslem cleric was assassinated on Sunday evening by unidentified assailants. He was the Friday prayer leader in the southeastern province of Sistan-Baluchestan.

HAMSHAHRI

- The National Iranian Oil Company opened an office in Almaty. During the inauguration ceremony, Iran's ambassador to Almaty said that Iran places top priority on oil cooperation with Kazakhstan.

FARDA

- A number of parliament deputies criticised the foreign ministry for granting visas to some American visitors recently, ``particularly political-security elements such as Rupert Murdoch.'' The foreign minister will probably appear before parliament's foreign affairs committee to answer the question.

IRAN

- ``We should not impose our own thoughts on the society in the name of the Imam (Iran's late spiritual leader and founder of the Islamic Republic Ayatollah Khomeini),'' President Mohammad Khatami said.

SALAM

- ``Violent attitudes and abusing freedom are two sides of the same coin, leading to the restriction of freedom,'' Interior Minister Abdollah Nouri said in a student gathering.

((Gulf newsroom, +971 4 607 1222, fax +971 4 626982, dubai.newsroom+reuters.com))

End of DNI-NEWS Digest - 1 Jun 1998 to 2 Jun 1998 *************************************************