25 July 2022 - 15:36
  • News Code: 459880
CEO Speaks of Untold details about $40 bn Deal with Russia

TEHRAN (Shana) -- The CEO of the National Iranian Oil Company (NIOC) said a contract for the development of 7 oil fields worth 4 billion dollars has been signed with Russian companies and it is progressing despite the sanctions.

According to Fars News Agency, Mohsen Khojastehmehr, referring to the NIOC’s $40 billion memorandum of understanding with Russia's Gazprom, said: "The oil industry is an income-generating industry as well as a capital-intensive one, so in order to fulfill development plans and carry out other tasks, NIOC needs to attract capital in the oil industry to provide part of the country's budget.”

He noted: “We do not forego any opportunity to attract financial resources in this industry and we seek to attract capital from domestic sources including banks and holdings of large industries and external sources including finance from different countries.”

$4bn Deal Signed with Russian Firms for Developing 7 Oilfields

The CEO of National Iranian Oil Company added: “One of NIOC plans to attract foreign capital is to use the capacity of Russian companies. In the past, we had signed memoranda of understanding and contracts with reputable Russian companies, which have come to fruition.”

Khojastehmehr said those memorandums have reached the signing stage after going through various stages, including conducting preliminary studies on the fields, signing confidentiality agreements, presenting technical and economic proposals and contract negotiations, approval by the board of directors of NIOC, and receiving the approval of the Economic Council.

He said: “So far, we have gone through the same path for the development of seven oil fields with Russian investment, which have become contracts worth 4 billion dollars, and now are in the operational stage. Out of these seven fields, the two fields of Paydar Gharb and Aban are joint fields.”

Iran, Russia Enjoying Deepest Strategic Ties

Khojastehmehr stated: “Gazprom is one of the largest international companies in the field of oil and gas field development and is one of the biggest energy giants in the world. In the past, many efforts were made to cooperate with this company, but to no avail.”

The NIOC CEO said: "Today, due to the change in international conditions and the new world order, Iran and Russia have entered into the deepest strategic relations, which encompass all economic dimensions of the two countries, and cooperation between Iran and Russia is progressing with the prospect of creating long-term infrastructure.”

He said Iran and Russia's gas reserves amount to 70 trillion cubic meters in total and include 30% of the world's gas reserves. These two countries are the leaders in providing gas energy in the world. Consolidation of relations between the two countries causes synergy and increases their standing in the international arena, because political relations are not formed independent of economic relations, especially in the field of energy.

Khojastehmehr said: “The MOU between NIOC and Gazprom, whose value is estimated at $40 billion, is the result of active diplomacy in the 13th administration. The visit of the president to Russia in January and the meeting of the petroleum minister with the senior executives of this company opened up a new chapter in the relations between the two countries.”

The CEO of the National Iranian Oil Company said: “During my trip to Russia, we held an important meeting with the CEO of Gazprom in St. Petersburg, and in that meeting, we reached a conclusion about the joint plans of the two countries in the field of oil and gas. Last week, a high-ranking Russian delegation from Gazprom arrived in Tehran, and the plan was to sign this strategic memorandum during Mr. Putin's stay in Tehran.”

6 Strategic Axes of Iran-Russia Oil Memorandum

He added: “The memorandum of understanding between the National Iranian Oil Company and Gazprom includes 6 axes, which are investment in the development of oil and gas fields, investment to complete the half-finished Iran-LNG project, definition of new floating LNG (FLNG) and small-scale LNG (MiniLNG) projects, gas swap, oil product swap, construction of high-pressure export lines and technology transfer.”

Khojastehmehr emphasized: “Sanctions will not affect this memorandum and the signing of its contracts, because Iran and Russia have decided to define strategic relations between each other under the conditions of sanctions.”

The CEO of the National Oil Company said: “If the Russians were not determined in this memorandum, they would not have signed the contract worth $4 billion. Sometimes a memorandum of understanding is signed for the first time and there is no record of cooperation between the two countries. In these cases, one can doubt whether this memorandum will lead to a contract and whether the two countries are determined.”

“But remember that the Shadegan Field development contract was signed in Moscow between the two parties in December of last year. Kopal Field was also implemented in the same visit and now these two contracts have entered the implementation stage. The Russians are going to build downhole pumps and are now installing the equipment in Khuzestan province.”

Khojastehmehr said: “Therefore, considering the history of the $4 billion contract with the Russians and their operations in the fields of Iran, there should naturally be no doubt about the determination of the parties to convert the memorandum into a contract, and we will do our best to speed up the steps to reach the contract stage.”

Moreover, he added, the supreme leader in the meeting with Mr. Putin and President Raisi stated that these memorandums will follow their own implementation phase. As a result, it is clear that at the highest levels of Iran and Russia, there is this will to reach the conclusion of the MoU.

He emphasized: “Before Mr. Putin's visit to Tehran, we had a very important meeting with the Deputy Prime Minister of Russia, in which the contents of this memorandum were discussed, and the Russians had a serious determination in this area.”

Russian firms did not leave Iran's oil projects after the failure of JCPOA

Khojastehmehr said: “Russia is one of the largest crude oil producing countries and their expertise is oil production in very harsh and difficult climates. The ability and technology of Russian companies in oil production is very high, and as a result, they will undoubtedly be able to cope with the development of Iran's oil and gas fields, and their history in Iran also shows this.”

The CEO of the National Oil Company said: “Russian companies did not leave Iran's oil projects in the circumstances after the failure of the JCPOA, and right now they are operating in Iran's oil fields under sanctions using the capacity of domestic contractors. The projects of the Russians are being implemented in the fields of Paydar Gharb, Aban, Dalperi, Cheshmehkhosh and Paydar Shargh. The Russians use the Iranian West Oil and Gas Company to exploit the oil fields.”

News Code 459880

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