The current worth of Russia’s contracts in Iran's oil and gas fields is $4 billion, but Iran’s state news agency IRNA says if the new MoU leads to any contracts, Moscow’s total investment will increase 10-fold to $40 billion.

The agreement, as announced by the oil ministry’s Shana news agency, covers the development of the Kish and North Pars gas fields, as well as six oil fields.

The development of Kish and North Pars gas fields, pressure enhancement of South Pars field, development of 6 oil fields, gas and product swap, completion of LNG projects, construction of gas export pipelines, and other scientific and technological cooperation are among the most important highlights of the memorandum.

The relations between Iran and Russia under the 13th administration have been put on a new path with the support of Iranian President Ebrahim Raisi and Russian President Vladimir Putin, and the two countries want to expand relations on all economic and political grounds.

It was penned during an online ceremony by the companies’ chief executives on the day Vladimir Putin arrives for a three-way summit with Iran’s President Ebrahim Raisi and Turkey’s President Recep Tayyip Erdogan.

The most significant aspect of the Gazprom-NIOC memorandum for Iran may be access to technology for LNG (liquid natural gas), which Tehran once hoped to access through agreements with western majors, especially Total, that withdrew in the face of United States ‘maximum pressure’ sanctions after 2018.

North Pars has around 33,000 billion cubic feet (bcf) of gas, and Kish gas-field 8,300 bcf. Both are currently at the feasibility stage.

While Iran has the world’s second-largest gas reserves after Russia, it has been slow to develop its fields and boost exports in the face of sanctions.

Iranian energy industry

The National Iranian Oil Company (NIOC) is a government-owned national oil and natural gas producer. It was founded in 1948.

Iran has sought some $140 billion in investments for its oil and gas sector. It has counted on Russia and China for this support. Earlier reports say that Iran exports around 800,000 barrels of oil a day. NIOC CEO Mohsen Khojasteh Mehr said in March that the country's crude oil exports had increased by 40 percent since the summer of 2021. Reports in November 2021 noted that Iran has said it is ready to produce 700 million cm/d of natural gas from 37 offshore platforms in the South Pars field. 

The Kish gas field and North Pars gas field will be among those that receive huge investments.

The report said some 100 million cubic meters per day (cm/d) will be added to Iran’s gas production. In all, six fields will be developed by Gazprom. Another part of the agreement will focus billions in investment in the South Pars gas field. Gas swaps and oil products will be part of the project.

“We are designing a package so that we can transfer technology to centers in the field of technology,” said the report. The research will be part of the MUO.  

According to the Iranian media and statements from Iran’s energy sector, “Iran and Russia have a total of 70 trillion cubic meters of gas reserves, which is 30% of the world's gas reserves. Therefore, these two countries play a very important role in ensuring the world's energy sustainability.”

Circumventing sanctions by the West

The report also discussed the issue of sanctions. Iran and Russia are both under sanctions in the West. The report says that the Iranian National Oil Company has already dealt with contracts with Russian companies despite sanctions.

“There is no concern about the role of sanctions in the failure of these understandings and contracts,” the report says. There is also an eight-year plan in Iran that aims to invest massively in this sector.

“In this context, we will use foreign investment in the framework of obtaining maximum national benefits, and today we see that we are negotiating and signing contracts and memorandums with large and well-known international companies,” the company said.  

The world needs Iran’s oil, said the head of National Iranian Oil Company (NIOC) Mohsen Khojasteh-Mehr as he outlined his company's new operational and development strategies.  

"The world needs Iran's oil, and the share of Iran's oil exports cannot be removed from the world market, and this shows that Iran is a reliable and stable country for supplying energy to the world." 

Putin’s visit is being watched closely with the expectation of closer links between Moscow and Tehran, boosting trade from just $4 billion in 2021, with both subject to international sanctions and as the Ukraine crisis pushes up global oil and food prices.

References:

iranintl.com
jpost.com