Negotiation between Iranian and Iraqi Oil Ministers on Joint Oil Field Exploitation

The Iraqi Oil Minister announced after negotiations with his Iranian counterpart that a memorandum of understanding is likely to be signed this year or next year between the two countries for the exploitation of the joint oil fields of Khorramshahr and South Naftshahr. According to ISNA news agency, Hussein al-Laaibi, the Iraqi Oil Minister, reported on Sunday, July 29, after talks with Bijan Namdar Zangeneh in Tehran, that the ministers of the two countries discussed the transfer of Kirkuk oil to Iranian refineries. Mr. al-Laaibi stated that the extraction from the joint oil fields was another topic of negotiation between the oil ministers of the two countries. He added, "It has been decided that the technical committees of both sides will become more active. A joint memorandum on oil production from the two joint fields of Khorramshahr and South Naftshahr will be signed this year or next year." Bijan Zangeneh, the Iranian Oil Minister, also announced the integrated development of the two joint fields of Khorramshahr and South Naftshahr as one of the topics discussed by the parties. Mr. Zangeneh had previously reported in March 2017 about an agreement with Iraq regarding the production and development of several joint oil fields. The Azadegan, Azar, Yadavaran, Naftshahr, Behlaran, Paydar Gharb, and Arvand fields are among the joint oil fields between Iran and Iraq. The two countries have previously had conflicts over these joint fields. For instance, in December 2009, Iraqi officials announced that Iranian military forces had seized an Iraqi oil well in "Fakkeh", in the border area between the two countries. However, the Iranian Foreign Ministry denied these reports, and the foreign ministers of both countries emphasized the formation of a border technical committee to implement the agreements between them. In July of the same year, reports had also emerged about the seizure of this well by Iraqi forces, but the Central Oil Company attributed this to a misunderstanding between the border guards of the two countries. Iranian and Iraqi officials had agreed in 2011 that the development of several joint fields such as Yadavaran, Azadegan, and Hovizeh would be carried out in cooperation between the two countries. However, the Iranian Oil Minister emphasized in 2014 during a visit to the oil facilities in the city of Dehloran on the Iran-Iraq border that Iran fully extracts its share from the joint oil fields with Iraq. Mr. Zangeneh had previously described the status of oil production in the joint fields with neighboring countries as "a source of shame." After Western sanctions against Iran, Iran's exploitation of some of the joint fields between the two countries faced difficulties. For instance, Gazprom, which was responsible for developing both the Iranian and Iraqi sections of the Azar field, ultimately retreated from developing the Iranian section after two years of delay and accelerated the development of the Iraqi section alongside three companies: KOGAS from South Korea, TPAO from Turkey, and Petronas from Malaysia. Iraq, by signing new types of contracts that are very similar to Iran's new oil contracts, increased its oil production from about 1.7 million barrels to 4.7 million barrels between 2005 and 2017. The Research Center of the Parliament had previously reported that "the extraction of Iran's neighbors from the joint oil and gas fields in the Persian Gulf is collectively nine times that of Iran." However, some conservatives oppose contracts with foreign companies, including Total, for the exploitation of these joint fields. The contract for the development of Phase 11 of South Pars with Total for the exploitation of this shared area between Iran and Qatar has been signed. So far, Qatar has taken the largest share of this partnership, and the day after the contract was signed between Iran and Total, Qatar announced that it would increase its gas production by 30% by 2024. Meanwhile, Eshaq Jahangiri, the First Vice President, claimed last year without going into details that some countries that have joint oil fields with Iran "spend and incur costs within the country" to prevent new oil contracts for Iran. In this context, Iraq has begun drilling in the Hovizeh field near the Iranian border.