Page 5 - MEOG Week 15 2022

MEOG COMMENTARY MEOG

Iranian Minister of
Petroleum Java Owji

gas fields as part of cash-intensive efforts to raise capacity expansion, the country has repeated
gas production to 1.5bn cubic metres per day, calls discouraging Kuwait and Saudi Arabia from
also by 2030. exploiting the Dorra/Arash asset in the Gulf.
He told state energy sector media outlet Ministry of Foreign Affairs spokesman Saeed
Shana that the expansion is aimed at increasing Khatibzadeh said this week: “There are undeter-
feedstock availability to allow gas refineries to mined borders between Iran and Kuwait that
operate at capacity; however, given the shortage should be demarcated. The Islamic Republic of
of gas experienced during winter months, extra Iran has stated that there should be no exploita-
capacity is likely to come in handy. tion in Arash Field before the demarcation.”
He was quoted as saying that considering The comments follow the recent agreement
the under-utilisation of Iran’s gas refineries, the between Kuwait and Saudi Arabia to produce
country was enhancing capacity at existing fields gas from Dorra, around 30% of which lies within
while developing new gas fields. Kuwaiti or the shared territorial waters of the
Owji said that all of these projects, both Partitioned Neutral Zone (PNZ).
onshore and offshore, would be completed dur- Kuwait last week invited Iranian ministers for
ing the incumbent government’s term in office, talks towards an agreement on demarcating the
which ends in August 2024. maritime border, while on April 13, a joint state-
To achieve this, he said that new methods ment by Kuwait and Saudi Arabia called for Iran
of financing would be implemented. “Oil and to engage in discussions.
gas projects need a lot of investment, so a new Khatibzadeh said: “There are undetermined
method that we are using to fund such projects borders between us and Kuwait that need to be
is to merge holdings, banks and large companies demarcated. Iran has stated that the field should
in the form of a consortium so that several large not be exploited before demarcation of the bor-
holdings or banks can jointly finance one major ders. We have sent a note to Kuwait that Iranian
project in the country,” Owji noted. rights are protected and the field should be
“This approach is being implemented and we jointly exploited, and Kuwait has announced its
will use this method both in the development of preparedness in this regard.”
fields and in the oil industry’s downstream devel- Any progress in this regard would mark a sig-
opment projects,” he added. nificant improvement in relations between Iran
However, according to Ian Simm, principal and the two Arab states.
advisor at consultancy IGM Energy, Iranian With Tehran laying claim to around 70% of
estimates peg the cost to develop the oil sector at the asset, negotiations are likely to be tricky, par-
$145bn over the next eight years, with the main- ticularly given that Iran and Saudi abandoned all
tenance and expansion of gas production levels political ties in 2016.
coming in at another $80bn. Iran, though, certainly has enough reserves
to pursue its claim without risk of territo-
Red line rial clash, but Tehran cannot be seen not to
However, while shared assets along the take a firm stance against any perceived Arab
border with Iraq will be pivotal to Iran’s encroachment.™

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