Russia's major oil producer Lukoil is in discussions with Tehran to reach a deal in coming months for developing two new oilfields in Iran and wants to expand its operations further in the Middle East this year, a senior executive said.
The oil company plans to add output from the region to existing operations in Iraq and Egypt as long as it finds projects with production costs as low as those in Russia, Gati Al-Jebouri, Lukoil’s head of upstream for the Middle East, said in Dubai according to media reports.
Lukoil is in talks with Iran’s state oil firm National Iranian Oil Co., for the Ab Teymour and Mansouri oil fields in western Iran, he said. Al-Jebouri said he hoped the companies could agree on a common development program for the fields in the first half of the year before proceeding to commercial negotiations and a partnership.
"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," Reuters quoted Jebouri telling reporters.
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 has outlined about 70 oil and natural gas fields that it said it will open to foreign investors through its new Iran Petroleum Contract (IPC), part of an effort to sweeten the terms it offers on oil development deals, as the country seeks funding and technology after international sanctions eased last year.
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.
In Iraq initial results of Lukoil’s exploration at the Block 10 area are “very positive” and the company plans to drill one or two more wells at the deposit in the country’s south this year, he said. Crude from the deposit will probably be similar in quality to that from the nearby West Qurna field, where Lukoil operates a production venture, Al-Jebouri said.
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.
The company is leaving a natural gas exploration venture with Saudi Arabian Oil Co. after the project in the kingdom’s Empty Quarter desert didn’t find commercially viable deposits of the fuel, he said. Lukoil returned four gas exploration wells to Saudi Aramco, as the state producer is known, at the end of last year and will shut joint the venture by the middle of 2017, he said.
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.