Lucrative Cooperation: European Oil Firms Queuing to Work With Iran

Iran is exporting 300,000 barrels of oil daily to European countries, Oil Minister Bijan Zangeneh said. The National Iranian Oil Company (NIOC) will soon finalize an agreement with France’s Total to sell 160,000 barrels a day to the company.

The minister added that the contract will be officially signed on February 16.

In addition to purchasing Iranian oil, "Total has indicated its readiness to take part in the development of South Azadegan oil field and Iran LNG project," he was quoted by PressTV.

The necessary information on the projects will be provided to Total, and then the French oil giant will offer its proposals to the Iranian side.

"This means that we have not reached an agreement to put them in charge of the project, but the agreement is for Total to carry out necessary studies on these projects," Zangeneh said.

The minister also hinted that Italy’s Eni has also expressed interest to work in the Iranian oil sector.

No contract with Italy has been signed though. However, according to the minister, Eni’s representatives will son visit Tehran in order to sign a deal for purchasing crude.

In addition, Italian refinery Saras has demanded to buy between 60,000 to 70,000 barrels of Iranian crude daily.

Earlier, Iranian oil ministry’s news agency SHANA reported that Tehran is adding final details to the new format of oil contracts, known as the Iran Petroleum Contracts (IPC), to attract more international investment in the country’s oil industry.

The IPC is expected to replace buyback deals. Under a buyback agreement, the host government agrees to pay the contractor an agreed price for all volumes of crude the contractor produces. But under the IPC, NIOC will set up joint ventures for oil and gas production with international companies which will be paid with a share of the output.

In November, officials from over 100 energy companies, including BP, Total, Eni and Repsol, attended a conference on the IPC in Tehran.

Sanctions against Iran were lifted on January 16, by both the US and the European Union. The move came amid oversupply in the global oil market, with the Organization of the Petroleum Exporting Countries (OPEC) refusing to cut down its daily output. According to forecasts, the implementation of the Iranian deal was expected to add at least 500,000 barrels per day to the oil market. For Tehran, increasing oil production is a way to compensate the financial losses the country sustained when it was under the sanctions.

The removal of sanctions may also trigger at least $50 billion a year in foreign investments in the country’ economy, central bank governor Valiollah Seif told Bloomberg.

Europe is currently Iran’s biggest energy partner. In late-January, The Wall Street Journal reported that Iran agreed to lower price of its crude for Europe, following the similar move by Saudi Arabia. At the same time, Tehran increased crude prices for Asia where it is expected to target India, the Asia’s fastest-growing oil consuming market.