Tehran awards Azar oil field contract

12 October 2011

Local consortium wins deal after Russia’s Gazprom was blamed for delays

Iran has awarded a $1.9bn contract to develop the onshore Azar oil field to a local consortium, after cancelling plans to award the contract to Russia’s Gazprom.

The local Oil Industries’ Engineering & Construction Company (OIEC) was given preference over the Russian company by the National Iranian Oil Company (NIOC). The state oil firm repeatedly accused Gazprom of delaying the project.

According to the agreement, signed on 11 October, the oil field will be developed in six years and will produce 50,000 to 65,000 barrels of light crude a day for a period of 25 years.

NIOC signed a memorandum of understanding with Gazprom Neft, the Russian company’s oil production arm, in 2009.

The company was tasked with evaluating the project’s technical and economic feasibility before signing a final production contract.

As international sanctions on Iran mounted in recent months, the NIOC issued several statements condemning what it perceived to be unnecessary delays.

“Unfortunately, the Russian Gazprom company delayed fulfilling its undertakings and NIOC had given it repeated warnings, which were never heeded,” NIOC head Ahmad Qalehbani was quoted in the domestic press. “It was decided that we terminate our cooperation with this company in the Azar oil field, and assign the project to domestic contractors.”

The Azar field lies on the border to Iraq and holds an estimated two billion barrels of oil. Iran has access to 40 per cent of those reserves.

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