UPDATE: Iran Says Signed Early Oil-field Deal With Russia Tatneft
19 December 2011 - 2:30AM
Dow Jones News
Iran said Sunday it had signed a preliminary, $1 billion
oil-field deal with Russia's OAO Tatneft (TATN.RS), clinching a
rare agreement with a foreign company amid mounting sanctions.
Iran's Oil Ministry website Shana said state-owned Petroleum
Engineering and Development Co. had signed a memorandum of
understanding with Tatneft to help develop the Zagheh heavy crude
field in southwest Iran.
Iran had initially called the deal a contract, but later
specified it was a memorandum of understanding, not a final
deal.
The deal, which other Iranian outlets said was worth $700
million, is to bring the field's production capacity to 7,000
barrels a day in a first phase and 55,000 barrels a day in the
second one. The tentative agreement comes as Iran has struggled to
replace Western oil majors after they pulled out due to mounting
international pressure over Iran's nuclear program.
Deals with non-Western players, however, have been fraught with
difficulties and its unclear if the Tatneft deal will ever be
completed. Russia's OAO Gazprom (GAZP.RS) earlier this year was
replaced by Iranian companies in a project after failing to
finalize a deal with Tehran and, according to the Mehr news agency,
China's National Petroleum Corp. is being fined for delaying works
in a natural-gas project.
Progress by non-Western players in Iran has been slowed by tough
contracts imposed by Tehran and the difficulty of finding financing
amid international banking sanctions. The Islamic Republic was
recently targeted by a string of measures against its banking
sector in the U.S. and the U.K. and is facing the threat of an oil
embargo in Europe.
Russia, which isn't part of the European Union, hasn't followed
suit with an EU ban on Iranian oil investment. It is only bound by
United Nations sanctions which are more narrowly focused on Iran's
nuclear program.
-By Benoit Faucon, Dow Jones Newswires; +44 20 7842 9266;
benoit.faucon@dowjones.com
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