Under two memorandums of understanding (MoUs) signed in 2004, Sinopec will take a 51 per cent stake in the field, while OVL is to take 29 per cent. It is understood that Chinese and Iranian negotiators are trying to reach an agreement quickly in case the UN imposes sanctions on Tehran over its nuclear programme. The UN Security Council will discuss Iran’s case after the International Atomic Energy Agency (IAEA) presents its next report to its board of governors in March.

Yadavaran has total reserves of 17,000 million barrels of crude, according to Iranian estimates, and is planned to be developed on a buyback basis. New Oil Minister Kazem Vaziri-Hamaneh is still working on proposals to alter the formula for Iran’s buyback oil contracts but it is unclear if the Sinopec deal will be affected. Chinese press reports say that Tehran wants production of 300,000 barrels a day (b/d) from Yadavaran, while Sinopec is unwilling to promise output higher than 180,000 b/d (MEED 9:12:05).

Yadavaran is one of the most important field development projects in Iran, which aims to increase oil production capacity to 5.4 million b/d by 2010 from 4.2 million b/d now. Japan’s Inpex Corporation has attracted criticism inside Iran for the slow pace of development of the enormous Azadegan field, which is expected to produce 150,000 b/d when completed. The project is still in its engineering phase and major subcontracts have yet to be signed (MEED 15:7:05).

Other projects intended to increase production from fields afflicted by depletion include the Aghajari gas reinjection project, for which NIOC is expected soon to confirm an $830 million deal with a consortium led by Chagalesh and Kayson Group, both local. The project will seek to raise production by 300,000 b/d (MEED 2:12:05).

Under separate plans, India is also negotiating a gas pipeline deal with Iran via Pakistan. India last year signed a 25-year SPA for 5 million tonnes a year of Iranian LNG but there have been recent disputes over gas pricing.

China has also said it will sign a similar SPA as part of the Yadavaran deal (MEED 5:11:04).