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Page added on February 19, 2013
Russia May Develop Heavily Sanctioned Iranian Oil
Facing embargoes from the U.S. and the EU, Iran allows Russian oil companies into its market.
Under sanctions from the United States and the European Union, Iran is looking to Russian oil companies for investments, inviting them to participate in various energy-related projects. So far, only Zarubezhneft has responded; others are more wary, believing the risks are too high, experts believe. Experts predict the move will not affect world oil prices.
Iran has invited Russian companies to take part in developing some of its oil and gas fields, Energy Minister Alexander Novak said after a mid- February meeting of the Russian-Iranian intergovernmental commission, RBC news agency reported. Iran may even be prepared to adopt necessary amendments to the law, in order to facilitate the entrance of Russian companies into its market.
Russian companies have worked in Iran before, though not for long.
In 2008, Gazpromneft and the National Iranian Oil Company signed a memorandum on the development of the Azar and Shangule fields located in the Anaran Exploration Block. In 2011, the Gazprom subsidiary had to leave the country, after being accused of being behind schedule in developing the field. Another theory has it that, for fear of U.S. sanctions, Gazpromneft was dragging its feet over the project.
In 1996, the U.S. passed a law allowing the American government to take measures against foreign companies and individuals with more than $20 million invested in Iran’s energy sector. LUKOIL, which worked at Iran’s Anaran Exploration Block, abandoned the project in 2010.
Economic sanctions against Tehran introduced by the EU in 2012 involve, among other things, a ban on the import, purchase and transportation of oil and its products. As a result, Iranian oil exports and oil export revenues decreased by 40 and 45 percent, respectively, between March and December of 2012.
According to Russia’s energy minister, Zarubezhneft has expressed its desire to take part in hydrocarbon projects in Iran. The company is 100- percent state-owned and has no need to fear U.S. sanctions.
Zarubezhneft representatives – like the representatives of companies Gazprom Neft, LUKOIL, Bashneft and Rosneft – declined to comment.
“Most Russian companies are happy to participate in such projects [under various arrangements],” says Mikhail Loshini, an analyst at RMG Research. “The deals are generally highly lucrative…Although, in this case, the risk is very high, because extracting the oil will be possible, but it will not be clear who will buy it. The European market is closed, which leaves only Asia, where contracts are already in place.”
Iran may, of course, change its laws and allow Russian companies to sign participation contracts rather than service contracts, according to Sberbank CIB analyst Valery Nesterov; however, he thinks Iran is unlikely to go for it. Russian companies would still not be interested in Iranian projects, because a large number of political risks would remain alongside the economic ones.
Iran is an OPEC member and produces about 4 million barrels of oil per day, with plans to increase output to 5 million barrels per day. Its daily production of gas stands at 60 million cubic meters (around 15.8 billion gallons).
“This deal will not affect world oil prices,” says Loshini. “Even though Iran has said it intends to increase oil production, while the embargo is in place, such statements are unsubstantiated.”
8 Comments on "Russia May Develop Heavily Sanctioned Iranian Oil"
DC on Tue, 19th Feb 2013 5:27 am
Usually RZ articles deserve nothing but the greatest of scorn, though to be far, Oil and Gas Urinal is pretty much tied for 1st place in that race.
But this article is somewhat interesting. What does ‘heavily sanctioned’ mean anyhow? What is ‘light sanctioning’? Anyone able to quantify that one? I dont know Russia is worried. Here is suggestion to our Russian friends.
-Work with Iran
-Move the Oil to Russia
-Foward Gas to China
China free to use for its own needs, or sell on world market for extra revenue. The US cant tell Iranian\Russian\Chinese oil from any others. Well, cept maybe alberta tar sands ‘oil’, that stuff is rude.
US sanctions are have no basis in any international law, and the EU is only going along because they firmly back under amerikas thumb atm. Therefore, US harassment aside, nations are free to ignore the US at will. In fact, all the ‘sanctioning'(illegal) is actually having the opposite effect. The peoples of the world are trying to create alternate structures for payment and trade in oil, and other commodities and goods. US actions are actually pushing the world away from Petro-dollar\IMF\WB hegemony. It wont happen over-night, but it is a good thing for the peoples of the world that the groundwork is being laid, is slowly.
BillT on Tue, 19th Feb 2013 10:50 am
How the fuck can the US pass a law that dictates to another sovereign country what it can and cannot do with it’s resources? How would they (the US) like China to dictate what can be done with US oil fields? It’s time Mother Nature takes down this rogue Empire. (The US, not Iran)
Arthur on Tue, 19th Feb 2013 11:57 am
Iran would like to move itself under the Russian military umbrella, but Russia is reluctant to antagonize itself too much with the West. And Russia is right not to provoke the ‘benevolent hegemon’ too much, as time works against the US and the financial sword of Damocles hanging over Washington, the only global party with an interest in war. The best move Iran could make is to temporarily halt all nuclear activities in a verifiable manner, just to eliminate any pretext the US could have of attacking Iran. Simply wait 1-2 years, that should be enough.
BillT on Tue, 19th Feb 2013 3:00 pm
Actually, Russia is not afraid of the US. And it uses every opportunity to give the Empire the finger. Why should it be afraid? It controls Europe’s gas lines and has hundreds of nukes still aimed at US cities. Russia does not have any debt to the Us or any other ties that would prevent them from doing what they want. Russia and China has the real power today, not the Us or Europe, and they know it.
Arthur on Tue, 19th Feb 2013 3:51 pm
Russia’s economy fits six times in that of the US and China’s economy two times. And the US army has nukes as well and a stronger army than Russia, if that matters much in a time of MAD. Russia would like to allied to the western club but does not want to be subservient to Washington and in general does not trust the US, first and foremost on the issue of missile defense.
Here Putin in Israel busy not to antagonize the master of the US:
http://www.kyivpost.com/content/russia-and-former-soviet-union/putin-wwii-history-must-not-be-reviewed-308755.html
Interesting why Putin brings up the subject in the first place. Could it be that Vlad is browsing the internet in the Kremlin?
Plantagenet on Tue, 19th Feb 2013 6:00 pm
Russia aleady helped Iran develop their nuclear program. Given that history, why shouldn’t Russia also help Iran develop their oil?
BillT on Wed, 20th Feb 2013 1:45 am
Planet, you are asking the correct question. There WILL be a WW3. The only question is at which hot spot it will start and by whom. And it will go nuclear. All three major players in the game have hundreds/thousands of nukes and will not allow anyone else to ‘win’ control.
DC on Wed, 20th Feb 2013 5:31 am
Bottom line, like it or not, Russia is not breaking ANY laws whatsoever, if they wish to do business with Iran or process its oil.