Come to Qum

OIL & GAS

In the ancient Iranian Moslem shrine city of Qum, oilmen gathered from all over the world last week. Their objective was to survey and if possible get a concession on a new oilfield which the Iranian government hopes will surpass the oil output of all the rest of the Middle East.

The Iranians had some reason for their confidence. Near Qum last August government oil drillers brought in a gusher that spewed forth 80,000 bbl. of oil a day. Before the well could be brought under control by U.S. Expert Myron Kinley (TIME, Feb. 9, 1953), more than 5,000,000 bbl. of oil flowed in a black river into a depression in the desert floor, made a lake of oil half a mile across.

Front-Runner. The state-owned National Iranian Oil Co. is sinking another well near the sealed-off gusher, plans to put down five more during the next 18 months to outline the field. The new holes will tell whether Iran struck an isolated pocket of oil under extremely high pressure or whether Qum is one huge continuous field. If it is the field that Iranians--and some U.S. oilmen--believe it is, then it will take enormous amounts of cash and special know-how, more than the Iranians possess, to control the mighty gas pressures and extract the oil. In addition, a pipeline to get the oil to the Mediterranean coast would have to go over rugged mountains. Cost estimates for the pipeline alone run as high as half a billion dollars.

Apparent front-runner in the race for the Qum oil concession is Italy's state-owned ENI oil and gas monopoly, headed by ambitious Enrico Mattei, who wants to force Italy's way into the international consortium of British, Dutch, French and 14 U.S. oil companies that holds the concession on Iran's older oilfield along the Persian Gulf. A fortnight ago ENI had reportedly closed a deal to exploit Qum itself. Last week it was disclosed that ENI had merely initialed a contract, subject to ratification by the Iranian Parliament, to explore three other areas. Under its deal ENI would advance $22 million for exploration costs, get nothing if oil was not found. If oil was found, it would pay the Iranian government half of all the profits, then give half of what remained to the National Iranian Oil Co. as its partner. The 75-25 profits split was so onesided against ENI that even some in the Iranian government suspected ENI's motive was publicity, to make Italy seem generous in demanding only a 60-40 split for concessions in her country. For some time Italy and Iran both have been trying to boost the 50-50 split that is standard in the Middle East.

New Law? While Iran was publicly demanding a 75-25 split with any company that wants to develop Qum, there were strong reports in Teheran that the Shah was well aware that major oil companies, with the capital and marketing facilities needed to sell Qum's oil, will hardly agree to such a split. To do so might well force a revision of royalties in the Middle East and other areas. Under the circumstances, oilmen expect that Iran will soon consider--and pass--a new law that will offer oil companies some tempting inducements to develop Qum and other Iranian areas.

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