The Yadavaran field is preparing to revive the Iranian oil sector with more production, amid ongoing negotiations with the Chinese company Sinopec, the developer of the first phase of the project 15 years ago.
The Iranian oil company entered into negotiations with its Chinese counterpart, Sinopec, to revive the agreement to develop the second phase of the field, which has been suspended since 2019, according to what was monitored by the specialized energy platform, quoting Argus Media, which specializes in analyzing energy markets.
The National Iranian Oil Company said that talks with the Chinese company Sinopec have reached advanced stages, and are about to finalize a deal worth $3 billion.
Talks have been going on since 2022
The Iranian company has been negotiating with its Chinese counterpart about the development of the second phase of the Yadavaran field for more than a year, according to Fereydoun Kord Zanganeh, investment director of the National Iranian Oil Company.
The Yadavaran oil field is located in western Iran on the border with Iraq, and its reserves are estimated at 30 billion barrels, which makes it one of the largest Iranian oil fields, according to the specialized energy platform.
The Yadavaran field is one of the 5 fields that make up the western Karun region, which Iran mainly targets in the context of plans to increase crude oil production.
And the National Iranian Oil Company announced, in the middle of last year (2022), an expansion plan in the oil sector by pumping investments worth $8 billion in common fields with Iraq.
The oil fields shared with Iraq include: Azadegan, Yaran, Yadavaran, Darkovin, Naftshahr, Bidar al-Gharb, and Azar, according to what was monitored by the specialized energy platform.
Plans also include pumping billions of dollars in other investments in the South Pars field shared with Qatar, which is the largest gas producing field in the world.
Why terminate the previous contract?
Iran has revived negotiations with China’s Sinopec to develop the second phase of the Yadavaran field project, after it took over the first phase of the project nearly 15 years ago.
And the famous Chinese company obtained the first-phase development contract for the project from the National Iranian Oil Company in 2007.
The contract stipulates a rate of production from the field that will reach 58,000 barrels per day by 2010-2011, and then increase to 100,000 barrels by 2015.
However, the Chinese company failed to reach these targets at large rates, as its production did not exceed 50 thousand barrels by 2014, which led to strained relations with the National Iranian Oil Company.
The Iranian state-owned company issued repeated warnings to speed up work, according to the production plan agreed upon between the two parties, which prompted Sinopec to activate production until it reached the desired goal in 2016.
Production also increased to 105,000 barrels per day in 2017, and the Chinese company was scheduled to continue in the second phase of development according to the contract dated 2007, but soon the two parties announced the end of the deal quietly in 2019, without explaining its reasons.
The National Iranian Oil Company (NIOC) has regained responsibility for operating the field after the deal is finalized, to be able to raise production to 120,000 barrels per day in 2020 so far, according to the specialized energy platform.
Iran is negotiating the return of the Chinese company to the sector again, through extended talks before the current Iranian government assumes its duties in 2021. An agreement was expected to return early, but former Iranian Oil Minister Bijan Namdar Zanganeh stopped the negotiations.
Sinopec did not comment
Sinopec has not issued any statements regarding its participation in the project again, in line with its cautious approach towards Iranian investments since the US withdrawal from the Iran nuclear deal in 2018 and the re-imposition of sanctions on Tehran.
The administration of US President Joe Biden is trying to revive the nuclear agreement signed with Iran during the era of former President Barack Obama in 2015, from which former President Donald Trump withdrew in 2018, but the outcome of the talks did not produce the desired results after a year and more than the joint meetings between the delegates of Washington and Tehran. .
Washington continues to impose US sanctions on Iran, by besieging Iranian oil exports abroad, as well as exports of oil derivatives and petrochemical products.
Imposing sanctions on 9 companies
The US Treasury recently tightened sanctions against Iran by listing the names of 9 Iranian, Singaporean and Malaysian companies accused of producing, shipping and selling Iranian petrochemical products to buyers in Asia.
The sanctions announced on February 9, 2023, included 6 holding companies that manufacture petrochemicals based in Iran, in addition to 3 companies in Malaysia and Singapore that promote Tehran’s products abroad on behalf of Trillance Petrochemical Company Limited.
The relationship between the United States and Iran has been strained over the past months, after Washington announced its support for the escalating protests against the Iranian government, which prompted Iranian President Ibrahim Raisi to threaten to freeze the nuclear deal file.
First visit in 20 years
The Iranian president – who is currently in the capital, Beijing – hopes to hold more talks to strengthen economic relations with China within the framework of the strategic cooperation agreement signed between the two countries in March 2021, for a period of 25 years.
The official visit – the first of its kind in 20 years – takes 3 days, from February 14 to 16 (2023), and includes a large commercial delegation, according to what was monitored by the specialized energy platform.
Oil Minister Javad Oji holds most of the spotlight on the accompanying delegation, amid expectations of reaching a final understanding regarding the negotiations for the second phase of developing the Yadavaran field, in addition to other projects in the oil and gas sector that Iran is offering to foreign investment.
The Iranian delegation has signed 20 agreements during the visit so far, covering the fields of energy, transportation and transit, according to Iranian Foreign Minister Hossein Amir-Abdollahian, without disclosing the details of these deals yet.
Leave a Reply