Russia's Zarubezhneft agrees contract with Iran's NIOC

Russia's Zarubezhneft and local Iranian company Dana Energy signed an Iran Petroleum Contract (IPC) with the National Iranian Oil Company (NIOC) to develop Aban and the West Paydar joint oilfields.

The contract covers the Aban and West Paydar fields. The deal is signed for a period of 10 years, extendable by another ten years. The consortium of Zarubezhneft (80 per cent) and Dana Energy (20 per cent) is expected to invest US$740 million in field re-development.

The initial MoU to study the Aban and Western Paydar fields was signed in 2016. Both fields lie close to Iran's border with Iraq.

This is the second oil contract agreed since the sanctions against Iran was lifted. The first oil contract of the post-sanctions era was signed in July 2017 between NIOC and an international consortium led by France's Total Oil Company to develop Phase 11 of South Pars.

Homayoun Falakshahi, Senior Research Analyst, Middle East Upstream commented: “Though the deal is relatively small compared to Total’s and CNPC’s for South Pars Phase 11 (which would bring $4.9 bilion in investment over 20 years), it is nonetheless significant. It signals strengthening Russia-Iran relations and could pave the way for other Russian companies to invest in Iran’s oil and gas industry. For NIOC, the deal secures the involvement of a company experienced in improving recovery rates at heavy oil fields and also brings much needed capital.”