Lukoil Negotiates with Tehran for Development of Two Oil Fields in Iran

Russian company Lukoil is in talks with the National Iranian Oil Company regarding the development of two oil fields in the west of the country. According to Bloomberg, Lukoil's regional manager stated that the company is seeking new opportunities for development in the Middle East, while Iran intends to transfer many of its oil fields for development to international partners. Gati Al-Jabouri, the head of upstream operations in the Middle East at Lukoil, mentioned that the company plans to leverage the region's oil capacities to expand its current activities in Iraq and Egypt, provided that the production costs in these projects do not exceed those in Russia. He referred to Iran as a target region at present. Al-Jabouri stated that Lukoil is negotiating to develop the "Ab Taimur" and "Mansouri" fields. He expressed hope that both parties would reach an agreement on a joint development plan in the first half of this year and then continue commercial negotiations and cooperation. The oil reserve of the Mansouri field is estimated at 15 billion and 142 million barrels, while the Ab Taimur field's reserve is estimated at 15 billion and 258 million barrels. Each of these fields currently produces about 60,000 barrels of crude oil per day. Iran has previously signed a contract with Lukoil to study these fields. Lukoil is among 29 foreign companies that Iran has recently authorized to participate in tenders for the development of its 49 oil and gas fields. Other Russian companies, such as "Zabrozhneft", "Tatneft", and "Gazprom Neft", have also signed memoranda for the development of several other oil fields in Iran. In total, since the lifting of sanctions on Iran following the implementation of the JCPOA, Russian companies have signed seven memoranda for the development of Iran's oil fields. Following the lifting of international sanctions, Iran has proposed the development of about 50 oil and gas fields to foreign investors to attract capital and technology. Gati Al-Jabouri also mentioned that initial results from Lukoil's exploratory operations in Iraq in Block 10 are very positive, and the company plans to drill one or two more wells in this area in southern Iraq this year. The crude oil from this area is likely to be of similar quality to that from the "West Qurna" area, which is nearby and where Lukoil has invested. Lukoil is also seeking other opportunities in Abu Dhabi and Kuwait. The company abandoned a joint gas exploration project with Saudi Aramco after it became clear that the reserves in that area were not economically viable. Lukoil returned four exploratory wells to Saudi Aramco at the end of last year and will end its joint investment by mid-2017.