SC involvement in Iran started in late 1995 when discussions were initiated by Total Sirri for the potential provision of logistics services for the Sirri A & E project. This project had been initially awarded to Conoco who were precluded from commencing the project due to the US sanctions on Iran.

For the purpose of the following, OSC is used broadly to cover the involvement of its Iranian joint venture, Iranian Oilfield Services Company (IOSC) and this company's predecessor company, Qeshm Marine Oilwells Services Company (QOSC).

One of the key objectives in establishing our Iranian joint venture was to maximise Iranian content through training of Iranian personnel and investment in infrastructure in Iran to support the various buy-back projects. This is an on-going process and great progress has been made in this respect.

Our involvement in the following projects demonstrates our commitment to the support of the buy-backs.

Total Sirri A & E

The original contract between Total and the Iranian Government was signed in 1995.

OSC tendered for the Logistics Base Contract late in 1995 in competition with several other local companies. This tender was for the provision of logistics services for the delineation phase of the project with an anticipated contract period of one year during which time 2 or 3 delineation wells were to be drilled.

OSC's bid was successful and the contract was signed in February 1996 and the provision of services began at the same time. These services were the typical offshore supply base facilities in Jebel Ali and included warehousing, base offices, outside storage with pipe racks, jetty facilities, stevedoring including base handling equipment and personnel. Other elements were added to the contract on an ongoing basis and OSC was responsible for all of the materials imported into the Jebel Ali facilities for the delineation wells project.

Following the completion of the delineation project, Total Sirri tendered for the development project in early 1997 and again OSC was successful in the bidding process and the development work commenced in July 1997. The scope of services was similar to those for the delineation wells and the actual contract should normally have expired in July 2000 but was extended for various reasons until early 2001. Total Sirri drilled 40 development wells over the 3½ year period using OSC's Jebel Ali facilities as a base with only minor HS&E issues with our contracts having been completed to Total's satisfaction.

In addition to Logistics & Base Services, OSC also participated in the provision of 185/8" casing, H²S services and facilitated the contract for Casing and Tubing Running Services.

Total South Pars II/III

The original tender documents for the two delineation wells were issued by Total South Pars in March 1998 and OSC bid through its Iranian joint venture, QOSC and was awarded the contract in July 1998 for a 10-12 month duration. A key stipulation of the contract was that it must be operated from within Iran itself thus OSC/QOSC established its presence on Kish Island to support the Total South Pars project and imported the necessary, certified rolling stock and handling equipment from Jebel Ali to undertake the project. The Jebel Ali facilities continued to be utilised as strategic support for the Kish Island facilities and the appraisal wells were completed reasonably on schedule with no major HS&E issues.

Late in 1999, OSC/QOSC/IOSC was invited to tender for the development project for Total South Pars II/III and a comprehensive bid was furnished once again featuring Kish Island supported by Jebel Ali. The scope of services was similar to Total Sirri and for the appraisal wells operation. Whilst we were unsuccessful with our bid, Total South Pars selected a Kish based company, we have continued to provide quality services from Jebel Ali to support the drilling campaign.

In the context of the various South Pars projects OSC/IOSC is committed to the use of Assaluyeh as a base support location and is further willing to invest in the necessary infrastructure there as it is firmly believed that Assaluyeh is exactly the correct location to provide onshore support for the offshore drilling programmes.

Shell Soroosh/Nowrooz

OSC/IOSC began its involvement with Shell for its offshore Soroosh/Nowrooz project with discussions as early as the beginning of 1999 when the concept of using the Ports and Shipping Organisation (PSO) facilities was truly in its infancy. Challenged by the prospect of finding a suitable location to support the drilling campaign for Soroosh/Nowrooz (the fields being located in the northern most sector of the Gulf), OSC undertook a physical review of the possible locations that might be able to offer the appropriate facilities including Bushehr (too congested), Kish Island (too far away), Assaluyeh (under developed), Kharg Island (potentially too sensitive and therefore concluded to be too difficult) and Bandar Imam Khomeini (BIK). BIK was selected due to the existing infrastructure and the pragmatic management. OSC/IOSC signed a 10 year agreement with PSO for quayside, outside storage and warehouse/office facilities. One needs to bear in mind that BIK has never supported an oil and gas project previously but the concept of OSC/IOSC adding its logistics expertise to the existing PSO facilities was developed and it was thought to be a very interesting proposed solution to the support base for Soroosh/Nowrooz.

Various discussions and presentations were made to Shell personnel throughout 1999 and these culminated in Shell Iran Offshore Ltd (SIOL) giving the contract to IOSC for the Provision of Logistics Base Services in July 2000. The base at BIK is now a fully operational oilfields logistics base and is staffed almost exclusively by Iranians most of whom have received on the job training by OSC. The scope of IOSC's contract includes the typical logistics base services, waste management services, container management services and customs clearance services.

IOSC is operating in BIK to Shell's exacting HS&E requirements and much progress continues to be made in this area. One element of this is the investment being made in BIK for incineration of waste from the rig and the base which should account for a good deal of the waste generated. IOSC manages the waste on a 'cradle to grave' basis.

A fairly unique feature of IOSC's organisation in BIK is that one of the rotational base managers is a Shell employee effectively seconded to IOSC for the contract duration.

Iranian content, being a key issue in the buyback projects, is very high in the Soroosh/Nowrooz contract due to the facilities and personnel and currently stands at 85% which is particularly impressive.

The drilling portion of the contract finished in August 2003 and thereafter IOSC has handled support for the production phase as an extension to the original contract.

TotalFinElf - Balal

OSC/QOSC was invited to tender for Logistics Base Infrastructure and Management Services in September 1999 to Elf Petroleum Iran. This was before the merger of TotalFina and Elf.

Our tender submission presented Elf with the choice of Kish Island, Lavan Island or Jebel Ali.

Elf had experienced many delays in the project primarily due to contract difficulties and engineering projects and the fact that the merger between TotalFina and Elf was ongoing certainly did not help the process.

However, we were notified very late in 2000 that we had been successful with our bid and that the logistics for Balal would be handled by IOSC through the Jebel Ali facilities. Once again the scope of services is typically as described earlier for Total Sirri.

Elf Balal intends to drill two exploratory wells and 10 development wells over the course of the next three years having commenced early in 2001.

TotalFinElf - Dorood

IOSC tendered the Handling/Lifting/Transportation Services to TotalFinaElf for its Dorood project in May 2001 together with a tender for Agency Services or the same project. The Dorood project involves drilling an offshore well south of Kharg Island and drilling 27 wells onshore on Kharg Island itself.

The offshore programme should last ± nine months whereas the onshore programme will continue for 2½ years.

IOSC has been successful with its tender and will provide the logistics services from Bushehr for offshore and from Kharg Island in support of the onshore drilling programme.

Mobilisation for Kharg/Bushehr commenced late in June 2001.

This project is expected to continue until the end of 2005 at the current rate of progress and IOSC handles all oilfield logistics on the island for Total and provides water generation through the use of its reverse osmosis system amd also transports water as approprioate with its three water tanker/trailers. Support is also provided by IOSC for Total's drilling contractors to satisfy mobile crane requirements.

South Pars IV/V

ENI/Agip has been awarded the South Pars IV/V buyback project which includes the drilling of two appraisal wells between July 2001 and December 2001 and following a 6 month analysis of the results will go back to drill 24 offshore wells over a 30 month - 36 month period.

OSC has been awarded the contract for Provision of Onshore Base Services at Jebel Ali in support of the appraisal project and provide support as required from Kish Island.

South Pars VI/VII/VIII

Petropars together with Enterprise Oil have been awarded the South Pars VI/VII/VIII project and drilling will commence in July 2001 on the first of the three appraisal wells. After evaluation it is anticipated that a further 27 development wells offshore will be drilled over a three year period commencing in Summer 2002.

IOSC has been awarded the base services contract from Jebel Ali and will also provide support for the appraisal wells from Kish Island.

Since shell acquired Enterprise Oil and subsequently declined interest in taking over the contractual commitments of Enterprise Oil, Statoil has signed the agreement and is now operating the South Pars VI/VII/VIII project from Kish island. Their drilling campaign commenced in November/December 2003 and is expected to run for just over two years which should result in completion of the project by December 2005.

OSC and IOSC are both shareholder companies in Petropars Oilfield Services Company (POSCO) which handles all Statoil's logistics services on Kish island. These services are fully supported by OSC/IOSC and IOSC also handles the stevedoring elements for the oil and gas projects for Kish island authorities.

Anaran

Norsk Hydro (Saga Petroleum Iran) has been awarded the exploration project in Iran in an area close to the city of Dehluran. This is an onshore project comprising 5 exploration wells planned to commence early October 2001 with an anticipated duration of 165 days per well for the drilling operation plus testing as applicable. The drilling rig will be moved between different rig sites in the area within the Anaran block.

IOSC has been awarded the contract for provision logistic, customs clearance and forwarding services from her base in Bandar Imam Khomeini (BIK).

Bandar Imam Khomeini fully supports the Anaran project both for logistics and workshop services.

MEHR (OMV Iran)

OMV Iran is responsible as operator on behalf of the Mehr JOA and as contractor to NIOC Exploration for the exploration for, and appraisal of, hydrocarbons in the onshore Mehr license in Western Iran, north-west of Ahwaz, OMV Iran commenced its exploration activities in the latter part of 2003 and its intention is to drill 5 exploration & appraisal wells over a two year period.

IOSC is perfoming the contract Freight Forwarding / Custom Clearance and Logistics Base Services from its base at Bandar Imam Khomeini with support on and as required basis from Jebel Ali through OSC. These services are provided on a call-out basis for OMV Iran which substantially reduces the logistics costs by precluding the need for a permenently manned OMV logistics presence in the country.

Key elements of the services are HSE and Quality Assuarance both of which are fully integrated into IOSC's activities.

Other potential projects

Currently the following buyback projects have been awarded (or are about to be awarded) to foreign operators and IOSC might reasonably expect to have some involvement in the foreseeable future.

• Azadegun
• Bangestan
• Farsi
• Nosrat / Farzan Iranian Oil Company
• Cheshmeh - Khosh Cepsa
• Darkhovin / Darquain ENI (Agip)

There are potentially many more buyback projects to be awarded shortly including the huge Bangestan project (onshore) comprising the fields of Ahwaz, Ab-Teymur and Mansouri.

Azadegan presently negotiated with Inpex Corporation.

Continue to review our web site for further information or contact us for complete information on the current status of the buyback projects.