LONDON The buildup of excess cash reserves from high oil prices will present a new problem for next Iranian government, according to Iran's OPEC Governor Hossein Kazempour-Ardebili.

"It will be a fresh challenge for a new administration to have the vision to use the extra money in a way that encourages the private sector," he said in an interview with the latest edition of *** Petroleum Argues *** weekly.

IRNA quoted Ardebili, who is also a senior advisor on international affairs to the Oil Minister Bijan Namdar Zangeneh, as saying that the government will try to sell equity shares in the market to post private investment across all sectors.

The recovery in oil prices over the past 18 month had already allowed the country to reduce its foreign debt to below $10 billion, while increasing its monetary reserves, he said.

In his wide-ranging interview, Iran's OPEC governor revealed that a consortium of five Japanese oil companies was finalizing technical evaluations for the giant 26bn barrel Azadegan Oil Field and would be presenting a master development plan for the project.

"In my understanding, Japanese companies would like other partners in the projects, particularly us companies such as Chevron and Exxonmobil. But it will depend on whether the Iran-Libya sanctions act is renewed later this year," he said.

"If U.S. companies continue to be barred from investing in Iran, I expect Japanese companies will try European partners instead," Ardebili said.

He confirmed Iran's crude production capacity was "some 4.1 million barrels per days (bpd) at the moment" and that under the current and future five-year plans, this should be boosted to sustainable capacity of 5 million bpd by 2004 and 6 million bpd by 2008.

By the end of this year, the senior oil advisor said that he expected Iran to reach a production level of 4.3 million bpd with the extra output to meet the target coming mainly from Sirri, Doroud and Salman fields.

With regard to recent changes in Iran's buyback formula, he said that these include seeking guarantees to avoid a sudden drop in production after a project has been completed. But he dismissed suggestions about any consideration of production-sharing agreements.

Production-sharing types of contracts were not just against the country's Constitution but there were also historical reasons that go really beyond the merits or defects of such agreements, Ardebili said.

On OPEC's forthcoming meeting, he said it was "still too early to say" what will be decided, but pointed out that the organization had "achieved an extraordinary level of compliance" to help keep prices stable.