Iran gives 7 oil projects to Russia

Iran plans to assign development of seven oil fields to Russian companies, Iran’s Oil Minister Bijan Namdar Zanganeh said, explaining that Russian companies would develop and increase the recovery rate of the fields.

Iran has already signed the memorandum of understandings with Lukoil on studying Ab-Teymour and Mansouri fields, which contain over 5 billion barrels of recoverable reserves, with Zarubezhneft for study of Aban and Paydar Gharb fields and Tatneft for study of Dehloran field, Trend reports.

Russian oil company Gazprom Neft has signed a deal with National Iranian Oil Company (NIOC) to participate in the development of the Cheshmeh Khosh and Changule fields in Iran, the Energy Ministry said on Tuesday on its Twitter page.

"I hope that today, with the signing of the document, Gazprom Neft starts operation at two fields in Iran," Bijan Namdar Zangeneh said.

Iran’s oil fields’ recovery rate is about 25% averagely, but some of giant fields like Yadavaran and Azadegan have about 6-7% recovery.

All of the mentioned fields are among the 49 fields which Iran offered to foreigners based on the newly designed model contracts, called the Iran Petroleum Contract or IPC.

Alexander Novak said last October that Zarubezhneft will take up several projects worth a total of $6 billion in Iran’s oil industry.

A senior scientist at the Institute of Oriental Studies of the Russian Academy of Sciences, Stanislav Pritchin, speaking with a correspondent of Vestnik Kavkaza, the transfer of deposits to Russia will not be soon. "Currently, Iran has only started to consider the new format of the production sharing agreement, because they have very strict rules on the arrival of foreign companies," he recalled, adding that Iran's interest in attracting Russian companies in its oil industry is clear.   "Firstly, Iran is interested in returning foreign investors due to lack of investment in the development of the oil industry. As we know, before the sanctions, Russian companies had already worked in Iran, and Lukoil in the first place. Secondly, it fits into a global project for the development of the Iranian economy in the context of the Russian-Iranian economically important projects, such as the international transport corridor 'North-South' and possible new power units at nuclear power plant 'Bushehr'. Therefore, this step can only be assessed positively," Stanislav Pritchin believes.
A leading analyst of the National Energy Security Fund, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, in turn, explained Iran's desire to give Russia a number of fields by the lack of finance for their own development. "In fact, Iran has no money to develop these fields, therefore, it is faced with a choice: either it keeps them, and they remain not developed, or it gives them to foreign owners,which develop them at their own expense, and Iran receives at least part of the profits," he pointed out.   The Russian profit will very much depend on Iran's conditions the transfer of deposits. "For example, Lukoil receives both compensation and part of the produced oil in Iraq, according to the contract, which is a mixture of a production sharing agreement and the service contract. The same thing, I think, can be applied in Iran: a company comes in Iran, invest its money, offers its technology, develops fields and partly takes output. Another question is why in such circumstances Russian companies in Iran need raw materials, when they could develop Russian deposits for the same money," Igor Yushkov noticed.