TEHRAN (FNA)- Russia’s Gazprom Neft, the oil arm of energy giant Gazprom, has agreed to develop Iran’s North Azadegan oilfield and produce oil at three other fields.
The sides will discuss the terms in September.
Analysts say Gazprom Neft could earn as much as $3 billion annually from the North Azadegan oilfield.
The North Azadegan deposit, with recoverable oil reserves of 150 million tons (1.1 billion barrels), was discovered in 1999. It is located 50 miles west of Ahwaz in southwestern Iran and ranks among the world’s largest. Gazprom Neft plans to produce 5.5-5.6 million tons (41.16 million bbl) annually there.
Gazprom Neft is also considering oil production at three other fields in Iran, notably Shurum, Kukh-i-Rig and Dudru, on the same buyback conditions.
Svetlana Savchenko, head of investment planning at 2K Audit-Business Consulting, told Ria Novosti Gazprom Neft could seriously increase production by developing Iranian deposits. The Russian company will have to invest hundreds of millions of dollars, because it has pledged to cover all expenses.
On the other hand, potential revenues are economically promising.
Dmitry Lyutyagin, an oil and gas analyst at the Moscow-based investment company Veles Capital, said Gazprom Neft, which is to sell back to Iran up to 40% of oil produced at the field, might earn $28-$33 per barrel of crude (or slightly less taking into account its investment) at current oil prices, which promises high profitability. Given the planned production of 5.5-5.6 million tons, the Russian company will earn as much as $3 billion annually.
Russian companies are increasing their presence in Iran. In midsummer, Gazprom and the National Iranian Oil Company signed a cooperation agreement under which the Russian company is to receive a complete package of oil and natural gas projects.
LUKoil, Russia’s largest private oil producer, owns a 25% stake in the Anaran exploration project. Tatneft, one of Russia’s top ten crude producers, also wants to work in Iran.
Vitaly Kryukov, an analyst with the Capital Investment Group, said a joint venture between Gazprom Neft and LUKoil might bid for participation in the Iranian projects.
Iran, which sits on the world’s second largest reserves of both oil and gas, is facing US sanctions over its civilian nuclear program. Sanctions are increasingly deterring Western investors from running activity in Iran.
Iranian officials have dismissed US sanctions as inefficient, saying that they are finding Asian partners instead. Several Chinese and other Asian firms are negotiating or signing up to oil and gas deals.
Following US pressures on companies to stop business with Tehran, many western companies decided to do a balancing act. They tried to maintain their presence in Iran, which is rich in oil and gas, but not getting into big deals that could endanger their interests in the US.
Yet, after oil giants in the West witnessed that their absence in big deals has provided Chinese, Indian and Russian companies with excellent opportunities to signing up to an increasing number of energy projects and earn billions of dollars, many western firms are slowly losing reluctance to invest or expand work in Iran.
Some European countries have also recently voiced interest in investment in Iran’s energy sector after a gas deal was signed between Iran and Switzerland regardless of US sanctions.
The National Iranian Gas Export Company and Switzerland’s Elektrizitaetsgesellschaft Laufenburg signed a 25-year deal in March for the delivery of 5.5 billion cubic meters of gas per year.
The biggest recent deal, worth â‚¬100m ($147m, Â£80m), was signed by Steiner Prematechnik Gastec, the German engineering company, this month to build equipment for three gas conversion plants in Iran. This is at a time when France’s Total, Royal/Dutch Shell and Norway’s Statoil have put on hold their shares in multi-billion dollar contracts.
Washington and its Western allies accuse Iran of trying to develop nuclear weapons under the cover of a civilian nuclear program, while they have never presented any corroborative document to substantiate their allegations. Iran denies the charges and insists that its nuclear program is for peaceful purposes only.
Tehran stresses that the country has always pursued a civilian path to provide power to the growing number of Iranian population, whose fossil fuel would eventually run dry.
Despite the rules enshrined in the Non-Proliferation Treaty (NPT) entitling every member state, including Iran, to the right of uranium enrichment, Tehran is now under three rounds of UN Security Council sanctions for turning down West’s calls to give up its right of uranium enrichment.
Tehran has dismissed West’s demands as politically tainted and illogical, stressing that sanctions and pressures merely consolidate Iranians’ national resolve to continue the path.