Brazil's Petrobras Interested in Developing Iran's Oil Fields in the Caspian Sea

Iranian media have reported on the interest of Brazil's state oil company, Petrobras, in developing Iran's oil and gas fields in the Caspian Sea. The English-language television channel of the Iranian government, Press TV, stated that Rodrigo de Aderaldo Santos, the Brazilian ambassador in Tehran, announced during a meeting with Youssef Etemadi, the deputy CEO of the Caspian Oil Company, that Petrobras is willing to participate in Iran's hydrocarbon projects in the Caspian Sea. The official website of the Caspian Oil Company also reported that the Canadian ambassador, referencing the recent visit of his country's Minister of Mines and Energy to Tehran and meeting with Bijan Zangeneh, Iran's oil minister, stated that Petrobras is eager to collaborate with the Caspian Oil Company on oil projects in the Caspian Sea. This meeting took place on September 4, and according to the Shana news agency, affiliated with the Ministry of Oil, 'the first focus of the Iranian and Brazilian delegations' discussions was Iran's invitation to Petrobras to participate in the country's oil and gas projects. Petrobras had previously expressed readiness in August 2007 to invest $470 million for exploration and drilling three wells in blocks 6 and 29 of Iran in the Caspian Sea. However, with the increase in sanctions, this matter was put on hold, and ultimately, Iran discovered the Sardar Jangal field five years ago by drilling in block 6 of the Caspian Sea, which is said to have two billion barrels of oil reserves. Iran is the only coastal country of the Caspian Sea that does not exploit its reserves, but it plans to auction exploration and development of blocks 6, 24, 26, and 29 in its territorial waters based on a new model of oil contracts. According to Iranian officials, negotiations have so far taken place with companies such as Lukoil from Russia, Statoil from Norway, and Maersk from Denmark, but recently Mr. Zangeneh announced that 'so far, no investors have expressed interest in collaborating on development activities in the Caspian Sea.' In this context, Masoud Matin-Fard, the engineering and construction manager of the Caspian Oil Company, stated on September 4 in an interview with Shana that 'if we develop the Caspian fields today, it will take years for production to begin.' He also pointed out the existing obstacles to developing Iran's oil industry in the Caspian, including geographical location, the closed nature of the Caspian Sea, lack of easy access to open waters, difficulties of working in deep waters, a fundamental need for capital and updated technology for activities in this sector, and the lack of suitable infrastructure in the northern part of the country, adding that 'given the cost of oil production in deep waters and current oil prices in the world, it is natural that oil production from an area like the Caspian would not have significant economic viability.' Although the cost of producing oil and gas from the Caspian Sea is significantly higher than on land, international companies are notably active in the Caspian. Last year, Kazakhstan launched a $50 billion project at the Kashagan field in the Caspian Sea in collaboration with seven international companies, including ExxonMobil from the United States. Azerbaijan also signed a new $40 billion contract last week for further development of the Azeri, Chirag, and Guneshli fields with a consortium led by British Petroleum and involving oil giants such as Chevron from the United States, Total from France, Statoil from Norway, and others, aiming to produce about 4 billion barrels of oil from the three mentioned fields. These astronomical figures come at a time when Iran is generally trying to invest $100 billion over the next five years for the development of 49 oil and gas fields, including shared fields in the West Karun block, with a significant portion of the required capital needing to be sourced from foreign companies. However, this volume of investment attraction is currently shrouded in ambiguity, and only Total from France and CNPC from China have signed a $5 billion contract for the development of phase 11 of South Pars.