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negotiations with Washington. It is unknown whether fellow Chinese state firm Sinopec is still in discussions regarding the second phase of the Yadavaran oilfield.
Following Sinopec’s offer of more than $3bn to fund the development of Yadavaran in early 2019, the managing director of the local Petroleum Engineering and Development Co. (PEDEC) said during the summer that negoti- ations were ongoing for phase two. The Chinese firm is said to believe that its efforts to work on the field will not be subject to US sanctions, because it was first signed in 2007.
PEDEC’s Touraj Dehqani was quoted by state media outlet ISNA as saying: “Talks are still ongo- ing, but the process is going on at a slow pace.”
Sinopec has so far invested $2bn in Yadav- aran, having taken over as operator in 2008 when production was running at 25,000 barrels per day. Output is now around 120,000 bpd. The second phase entails the drilling of 105 wells to achieve 180,000 bpd, with Phase 3 targeting out- put of 300,000 bpd.
South Pars is Iran’s largest gas field and forms part of the world’s single largest gas deposit, which it shares with Qatar, while Yadavaran is one of the world’s largest under-developed oil- fields, with estimates suggesting that it contains in excess of 30bn barrels.
Local players
The news will be portrayed as a boost for local Iranian players; however, this could not have turned out worse for Tehran. When sanc- tions were lifted, the focus of Iran’s approach to international oil companies (IOCs) was that they could have access to world-scale fields at competitive rates in return for knowledge-sharing.
This never came to pass and Iran finds itself in much the same predicament of being reliant on foreign expertise, though now, the few partners it had during the previous sanctions regime – Chi- nese and Indian companies involved in various delayed projects – are now dropping off, leaving local firms to pick up the slack.
This has, however, been largely beneficial for the downstream sector, which has seen pronounced growth as part of Iran’s “resist- ance economy” model, but the pressure on the upstream sector to generate revenues for the state is far greater.
Olive branch
Seeking a way out of the current economic hardship, Zangeneh said on October 6 that Iran wanted to improve relations and ties with all the countries of the Middle East and suggested the possibility of negotiations with Saudi Arabia on joint projects.
“We want to be friends with all regional coun- tries. Out mutual enemy is outside the Middle East,” Zanganeh said, in a clear reference to the US. “I have no problem meeting with Saudi Ara- bia’s oil minister,” he added.
The US, supported by Saudi Arabia, is pursuing a policy of throttling Iran’s economy with sanctions in an attempt at forcing Tehran to accept a dimin- ished role in the Middle East, with even stricter controls on its nuclear development programme to ensure this remains entirely civilian.
As with previous efforts, though, any kind of rapprochement by Zangeneh, Foreign Minister Javad Zarif or President Hassan Rouhani is likely to be met with plenty of criticism from hardlin- ers in Tehran, who have been swift to remind more Western-thinking factions of government where the power really lies.™
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