Iran Makes Russian Breakthrough But Faces Increasingly Heavy Problem

Iran has scored a success with the belated signing of its second, post-sanctions upstream deal with foreign firms. But the continued focus on developing Iran’s heavier reserves is pressuring pricing for its Iran Heavy grade.

Iran has finally secured a second contract with an IOC after signing up Total and CNPC to South Pars Phase 11 in June 2017. Russian state firm Zarubezhneft signed a contract to develop two oil fields – 30,000 b/d West Paydar and 6,000 b/d Aban – and will be partnered by domestic firm Dana Energy (an 80:20 split).

The Iran oil ministry’s Shana news agency reports that under the agreement Zarubezhneft will increase combined production from the two fields from 36,000 b/d to 48,000 b/d during the 10-year contract. The contract is for $742mn.

The price-tag underlines the difficulty Iran faces in securing contracts for its blue-ribbon assets given the political uncertainty following the November 2016 election of US President Trump. This uncertainty has only grown since Mr Trump dismissed Secretary of State Rex Tillerson on 13 March and nominated CIA chief Mike Pompeo – a vocal critic of the Iran deal – as his replacement. (CONTINUED - 947 WORDS)


chart Iran Slashes Heavy Crude OSPs To Record 70¢/B Discount To Competing Saudi Arab Medium ($/B)