January 30, 2017 / 6:47 AM / 6 months ago

Russia's Lukoil hopes for Iran oilfield development decision this year

4 Min Read

FILE PHOTO: A general view shows an drilling rig at the Lukoil company owned Imilorskoye oil field, as the sun rises, outside the West Siberian city of Kogalym, Russia, January 25, 2016.Sergei Karpukhin/File Photo

DUBAI (Reuters) - Lukoil, Russia's No.2 oil producer, hopes to reach a decision on developing two new oilfields in Iran and wants to expand its operations further in the Middle East this year, a senior executive said on Sunday.

Lukoil is talking with the National Iranian Oil Company (NIOC) on taking part in development of the Abe Timur and Mansuri fields in central-western Iran, said Gati al-Jebouri, vice president and head of upstream operations in the Middle East.

"We are in active discussions with them with respect to budget cost structure, and subsequently we will start negotiations on contractual terms if the development plans that we proposed are accepted and agreed by the Iranian party," Jebouri told reporters on Sunday.

Lukoil signed several memorandum of understanding with NIOC last year, and "had site visits and have done significant amount of analysis as to how we potentially can develop the project," he said.

"We have presented our technical proposals and our views. We are discussing their feedback ... we would like to have some decision during the first half of 2017 from the Iranian side but there are no strict deadlines to this process," he said.

Iran hopes its new Iran Petroleum Contract (IPC), part of an effort to sweeten the terms it offers on oil development deals, will attract foreign investors and boost production after years of sanctions.

The first tender, which is likely to be for the South Azadegan oil field in southwestern Iran, will take place after January 2017.

Earlier this month, Iran named 29 companies - including Lukoil - from more than a dozen countries as being allowed to bid for oil and gas projects using the IPC model.

The IPC model has been delayed several times due to opposition from hardline rivals of President Hassan Rouhani. It ends a buy-back system dating back more than 20 years under which Iran did not allow foreign firms to book reserves or take equity stakes in Iranian companies.

The new IPC has more flexible terms that take into account oil price fluctuations and investment risks.

Jebouri also said Lukoil was "very interested in opportunities in other countries in the Middle East" such as Kuwait, Oman, and Abu Dhabi in the United Arab Emirates.

State-run Abu Dhabi National Oil Company (ADNOC) has said it was still looking for partners to take up the remaining 12 percent stake of the 40 percent earmarked for foreign partners in its onshore oil concession.

"We know that there are still 12 percent remaining and we will be happy to discuss any opportunities with ADNOC for investments by Lukoil in Abu Dhabi," Jebouri said.

Lukoil is developing West Qurna Phase Two oilfield in Iraq, which is currently producing 400,000 barrels per day, he added.

The company has another other project in Iraq, which is an exploration project with Japan’s INPEX.

Lukoil has completed drilling of its first exploration well in Block 10 and "it has proven to be successful," he said, adding the company plans to drill 1-2 more wells in 2017 to define the amount of reserves in the block.

Reporting by Rania El Gamal; Editing by Tom Heneghan

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