Iran to Transfer Development of Seven Oil Fields to Russia

On Tuesday, December 13, with the signing of a memorandum of understanding for the study of the Changuleh and Cheshmeh Khosh oil fields between Iran and Russia's Gazprom, the Minister of Oil announced that Iran intends to transfer the development of seven of its oil fields to Russian companies. According to the official news agency of the Islamic Republic, IRNA, this memorandum was signed in the presence of Bijan Zangeneh, Iran's Minister of Oil, and Alexander Novak, Russia's Minister of Energy, at the Oil Conference Center in Tehran. Zangeneh stated that Iran had previously signed a memorandum with Lukoil regarding the study of the Mansouri and Ab-Teymour fields. He also mentioned the signing of a memorandum for the studies of the Aban and Paydar-e Gharb oil fields with 'Zarubezhneft' of Russia, and emphasized that another memorandum for the development studies of the Dehloran oil field has been signed with Tatneft of Russia. The Minister of Oil announced Iran's readiness to cooperate with Russian oil companies in the country's oil and gas industry, stating that the main focus with Russian oil companies is the development of oil fields and increasing the recovery factor. The recovery factor refers to the percentage of oil from a field that can be extracted. The recovery factor for Iran's oil and gas fields containing gas condensates is about 25%. However, in heavy oil fields, this factor is much lower, in some cases below six percent. Iran aims to increase the recovery factor to boost oil production from its fields. For instance, the recovery factor for the Mansouri and Ab-Teymour fields is about 17%, meaning only five billion barrels of the 30 billion barrels of oil in place can be extracted naturally. All the mentioned fields are part of Iran's projects under the new model of oil contracts, known as 'IPC'. Iran intends to transfer 49 of its oil and gas fields to foreign companies under these new contracts. Each foreign company is required to choose an Iranian partner. The first tender for the development of these fields, which is said to require $130 billion in investment, is set to be held in the spring of next year. Iran expects that 80% of the required investment for these projects will be provided by foreign companies. The seven oil fields that Iran has signed memorandums with Russia for study and development have a total of about 43 billion barrels of oil in place. The extractable oil depends on the recovery factor from these fields. Recently, the Iranian Minister of Oil announced that with 860 billion barrels of in-place oil reserves, if Iran increases the recovery factor by just one percent, it could extract an additional eight billion barrels from these reserves. Currently, Iran's recoverable crude oil reserves are about 158 billion barrels. According to Mehr News Agency, Zangeneh also stated that 'we have reached an agreement for the daily sale of 100,000 barrels of crude oil to Russia and I have personally requested Alexander Novak, the Russian Minister of Energy, to finalize the agreement for this amount of oil in the next couple of days.' This official emphasized that if the agreement is reached, half of the oil sale amount to Russia will be compensated through technical and engineering services, and the rest will be paid in cash, stressing that an agreement with the Russians must be reached in the coming days.