(Bloomberg) -- Royal Dutch Shell Plc signed an agreement to assess three of Iran’s largest oil and gas fields as OPEC’s third-biggest producer looks to boost output with the help of international companies.
Shell signed a memorandum of understanding to evaluate the Azadegan and Yadavaran oil fields near the Iraqi border, and the Kish gas deposit in the Persian Gulf, Gholam-Reza Manouchehri, deputy director of the National Iranian Oil Co., said at a signing ceremony in Tehran on Wednesday.
“We’re happy to resume working in Iran,” Hans Nijkamp, Shell’s vice president for Iran, said at the ceremony. “We are hoping to have a fruitful cooperation with NIOC on these fields.”
International oil companies have re-established contact with Iran since sanctions were lifted in January. However, no final contracts to develop oil fields have yet been signed. Total SA reached a non-binding $4.8 billion agreement to develop a natural gas field last month.
The fields are some of Iran’s most attractive, Homayoun Falakshahi, an industry analyst at Wood Mackenzie Ltd., said by phone from London. “If you had a look at the list of the three or four biggest fields to be awarded, you have three of them here.”
Earlier Wednesday, an Oil Ministry official said Shell and Total would sign deals to develop the three fields, in what would have been a major step forward for Iran’s oil industry. The official later said talks were still ongoing with Total for other fields, but no agreement was expected imminently. Total declined to comment.
Iran hopes Shell will invest in the Azadegan and Yadavaran fields to boost recovery rates, Manouchehri said. Iran aims to produce 4.28 million barrels a day of crude oil by 2020, from 3.67 million now, according to Oil Ministry comments and data compiled by Bloomberg. It is prioritizing the development of shared fields on its borders, where its output has generally fallen behind that of its neighbors due to a lack of foreign investors.
The Azadegan field crosses the border into Iraq, where the deposit is called Majnoon. Iran’s output from the North Azadegan and South Azadegan developments is about 120,000 barrels per day, according to Wood Mackenzie. Majnoon, operated by Shell, produces more than 210,000 barrels a day, according to Iraq’s Oil Ministry.
Shell’s experience in Majnoon will “for sure” help it develop Azadegan and Yadavaran if it decides to do so, Falakshahi said. “The operating environment is quite similar.”
With assistance from Rakteem Katakey. To contact the reporters on this story: Hashem Kalantari in Tehran at email@example.com ;Sam Wilkin in Dubai at firstname.lastname@example.org ;Golnar Motevalli in Tehran at email@example.com To contact the editors responsible for this story: Nayla Razzouk at firstname.lastname@example.org Claudia Carpenter
Copyright 2017 Bloomberg News.
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