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Shell Returns to Iran With Deal to Assess Oil and Gas Fields

Blog Post created by kmillspaugh on Dec 7, 2016

(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.

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