LUKoil and Norsk Hydro To Jointly Explore Iranian Block

Lukoil and Norsk Hydro have signed a protocol of intent for cooperation in various joint projects. The protocol was signed by Ravil Maganov, first vice president of Lukoil, and Morten Ruud, president of Norsk Hydro Exploration and Production International.

At the same time, Lukoil Overseas Holding Ltd and Norsk Hydro also signed a contract relating to Lukoil's participation in the Anaran block in the Islamic Republic of Iran, in which Hydro has a 100 percent interest. The contract has yet to be approved by the Iranian authorities.

Hydro's interest in Anaran dates back to 2000 when the company signed an agreement with the National Iranian Company granting Hydro exploration rights in the onshore block, located near the Iraqi border. Norsk Hydro started shooting its seismic program at the Anaran block last year. Regarded as a high-potential area, the1,350 square-mile Anaran block is located in the prolific Zagros belt, where most of Iran's commercial oil and gas is located. Under the terms of the deal Hydro is committed to spudding five wells, three exploration and two appraisal, and carrying out at least 485 miles of 2D seismic studies by 2004. The contract is extendable by one year. At the end of that period, if Hydro and NIOC agree that the eventual find is commercial, Hydro may enter negotiations for a buy-back deal to exploit the oil. NIOC may, however, choose another company to apply for a buy-back project.

Lukoil Overseas Holding Ltd is the operator for Lukoil's international projects. "The letter of intent between Lukoil and Hydro is very positive," says Kama Holte Strand, information manager at Hydro Exploration and Production International. "It may also open up for cooperation on projects in Russia."