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Iran and Russia signed a deal on Wednesday to develop two oilfields in Iran, according to Iranian state TV. The National Iranian Oil Company signed a deal with Russia’s Zarubezhneft to develop the fields.

Iran awarded a contract to Russia’s Zarubezhneft to develop its Aban and West Paydar oil fields. These fields are located in areas near the border with Iraq.

This is a very important point. This is the first time that they are signing a deal to develop oilfields with a prominent Russian company.

The Aban and Paydar-e Gharb fields are both in western Iran and jointly owned by Iran and Iraq. Their combined oil output is currently 36,000 barrels per day.

Objectives of Iran Russia Deal

The 10-year agreement is intended to boost the production of the fields to 48,000 bpd. The fields are expected to produce 67 million barrels of oil during the ten years.

Zarubezhneft has an 80 percent share in the deal and the remaining 20 percent is by Iranian partner, Dana Energy.

The cost of developing the fields is estimated at $674 million, with an additional $68 million in indirect costs.

Iranian oil minister Bijan Zanganeh said at the signing ceremony: “We hope that it won’t be the last deal, It was a difficult negotiation and I say congratulations to both parties.”  Iran was in the middle of negotiations with other Russian energy companies including Gazprom, Lukoil, and Rosneft.

Danan and Dayyer

Seismological surveys of the Central Kavir desert in Iran have revealed a new oil deposit. The two foreign companies resume their exploration at two other oil blocks, Danan and Dayyer.

The Danan oil field, with reserves estimated at 3.738 billion barrels and daily output at 8,000 barrels. It had eight other oil fields by the Iranian Central Oil Fields Company.

The Dayyer offshore oil field was auctioned back in 2007. Edison struck a deal with the National Iranian Oil Company. It was to explore the deposit in the following year. The US$107-million contract was suspended by NIOC in 2012. The state company accused Edison of repeated delay and failure to stick to its contractual obligations.

Iran is currently producing 3.8 million barrels of crude daily. Its output will remain at this level in spite of OPEC’s agreement to extend a production cut until March 2018. In the initial OPEC deal, Iran was allowed to slightly raise output and keep it capped at 3.797 million bpd.

Therefore, Russian companies enjoy huge potentialities for developing Iranian oilfields.

Also, read this article Is Saudi Arabia done with crude oil?

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