Iran Likely to Grant Development of 2 Oil Fields to China's CNPC, Sinopec

State-owned National Iranian Oil Co. (NIOC) reported Tuesday that Iran planned to grant the development of 2 major oil fields in the country's southwestern Khouzestan province to 2 Chinese firms, according to a company executive.

China National Petroleum Corp. (CNPC) is likely to be awarded the development of the second phase of the North Azadegan project, while China Petroleum & Chemical Corp. (Sinopec) will take over the development of the second phase of the Yadavaran project, NIOC Deputy Director for Engineering and Development Affairs Gholam-Reza Manouchehri said.

He added that CNPC and Sinopec possess "vast financial resources" to develop the North Azadegan and Yadavaran projects, respectively, with the decision on the award of projects to the Chinese companies in accord with Teheran’s strategy to promote economic relations with Beijing. 

Negotiations between Chinese and Iranian officials on both projects have entered final stages during last week visit to Beijing by Iran's Minister of Economy and Financial Affairs Ali Tayyebnia. A Chinese delegation is scheduled to arrive in Teheran over the next few weeks to finalize negotiations for both projects, including the commercial, economic and technical aspects.

Tayyebnia arrived in Beijing Monday as head of a delegation participating in the 16th meeting of the Iran-China joint economic commission held on Tuesday and Wednesday. The Iranian Minister signed 2 memorandums of understanding with the Export-Import Bank of China (EXIM) and China Development Bank (CDB) to provide loans for key development projects in Iran.

Earlier this week, NIOC Director of International Affairs Mohsen Qamsari indicated that Iran is in urgent need of at least $100 billion in foreign investments to maximize production from the country's oil and gas fields as delays are expected to have an adverse impact on the local petroleum industry, Shana reported Monday.

"Presence of foreign investors for promoting Iran's oil and gas projects financially is a necessity for the country ... (it) will not only prevent diminishing production from oil and gas fields, but help develop underground reserves ... The damage incurred on Iran from every day of not developing its joint oil and gas fields is irreparable for the country's oil industry," Qamsari said, as cited by Shana.

OPEC said in its August 2016 oil market report that Iran produced 3.629 million barrels of oil per day (bopd) in July, up from 3.617 bopd in June and higher than 3.096 bopd in the first quarter.