The case of Ukraine, Russia's oil MoUs with Iran

The case of Ukraine, Russia's oil MoUs with Iran

By Dalga Khatinoglu

Iran's oil ministry says the Memorandum of Understandings signed by joint Iran-Russian and Iran-Ukrainian companies have been suspended.

During Ex-President Mahmoud Ahmadinejad's presidency, the Iran Oil Ministry announced in late 2011 that a contract with "Russian Tatneft" to develop the Zagheh heavy oilfield, as well as three MoUs with a Ukrainian company to develop the Kuhmund, Kaki and Bushkan oil fields were signed.

Now, Abdolreza Haji-Hosseinnejad, an official with the National Iranian Oil Company, said on May 13 that the sealed MoUs with mentioned companies have been halted.

Tatneft

Iranian former Oil Minister Rostam Qasemi said that Russia's OAO Tatarstan Tatneft (TATN) signed a $1 billion worth contract to develop Zagheh oil field during the visit of Tearstain's President Rustam Minnikhanov to Tehran on December 18, 2011. A day after that Tatneft denied signing any contract with Iran.

A couple of days later, Iran's ISNA news agency quoted Sadeq-Ali Nasseri, who was introduced as managing director of Iran Oil Kish Tatneft Co. said that the MoU for development of Zagheh was signed between National Iranian Oil Company (NIOC) and Iran Oil Kish Tatneft Co., not Tatarstan's Tatneft.

However, he said that Tatarstan's Tatneft is a shareholder in Iran Oil Kish Tatneft.

ISNA then reported in April 2012, despite the passing of several months from sealing the MoU with Iran Oil Kish Tatneft Co, the process had not reached the signing of a contract.

According to the report, the probable reason may be the problems around funding the Zagheh project by Tatbank. At the time Tatbank, a totally Iranian bank, which earlier was re-named Ayandeghan Bank was the investor of project.

Ukraine Gazprom

In February 2012, Iranian media outlets reported that Iran and a Ukrainian company signed three MoU to develop Kuhmund, Kaki and Bushkan oil fields.

According to the reports, Ukraine would invest $800 million in the projects.

After that, Iran's Oil Ministry announced the name of contractor as Inter Naft Gas Prom Pars Co. Mehr News Agency then called Inter Naft Gas Prom Pars Co. a joint Iranian-Ukrainian company, but Bahman Samimi, in charge of the development of heavy oil fields projects at NIOC denied reports on signing a contract on development of the fields with an Ukrainian company, adding negotiations have been confined to signing a MoU with an "Iranian company" named Gazprom Pars Kish.

None of the mentioned contractor companies have official websites.

Now, Hosseinnejad says that these companies are joint Iranian-Ukraine, Iranian-Russian companies and the MoUs have been halted because these projects are not Iran's current priorities.

He did not mention the exact date of halting the MoUs, but NOIC included the name of all four fields in the list of offered investment opportunities for foreign companies during an exhibition held last week. NIOC offered 41 projects for foreign investors, including Zagheh, Kuhmund, Kaki and Bushkan on May 5.

Fields

Kuhmnnd heavy oil field is located 80 km to the east of Bushehr port in southern Iran. Though eight wells have been already drilled in the field, only two wells are meant for heavy oil production. The field's in-place heavy crude reserves have been estimated at about one billion barrels. It is considered as the world's biggest heavy crude oil field.

Kouhkaki oil field is located northeast of Kouhmond about 15 km south of the city of Khormoj where only one well was drilled in 1973. The field contains light crude with estimated in-place reserves of about 780 million barrels.

Boushkan oil field is located 100 km north of Bushehr and 30 km from Dalan gas field. The field's in-place reserves have been estimated at about 340 million barrels with a single well drilled in 1963.

The Zagheh field has estimated reserves of about three billion barrels of crude. Oil extraction was planned to increase by seven thousand barrels a day in the first phase, rising to an extra 55 thousand barrels a day in five years time.

Dalga Khatinoglu is specialist on Iran's energy sector and Iran News Service head in Trend Agency

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