Gazprom said that the Russian gas giant has signed a deal with Iran to implement integrated projects for hydrocarbon production, transmission and processing in Iranian territory.

Gazprom CEO Alexey Miller led a delegation from the Russian gas company to the Islamic republic on December 13 where he met with Iran’s Petroleum Minister Bijan Namdar Zangeneh. “The parties confirmed their interest in advancing their partnership on a large scale and discussed potential areas of bilateral cooperation,” Gazprom said.

Miller and Iran’s Deputy Petroleum Minister and National Iranian Oil Company (NIOC) CEO Ali Kardor signed a “Roadmap” document, which allows Gazprom to conduct a “proof-of-concept study with regard to implementing integrated projects for hydrocarbon production, transmission and processing, including petrochemistry, in Iranian territory”.

NIOC is a wholly owned subsidiary of the Iranian Ministry of Petroleum focused on geological exploration, production, transportation and exports of crude oil, as well as geological exploration and production of natural gas.

Moreover, Miller, Kardor, and Nasrat Rahimi, Chairman of the Board of Directors of Oil Industry Pension, Saving and Staff Welfare Fund, signed a Memorandum of Understanding (MoU) to explore the opportunities for joint efforts within the Iran LNG project.

“Both documents reflect the willingness of the parties to cooperate along the entire production chain, from extracting gas in Iran to monetising the product,” Gazprom said.

Alexei Kokin, a senior oil and gas analyst at UralSib Financial Corp in Moscow, told New Europe by phone on December 15 that “it’s a bit early to say” about the potential cooperation between Tehran and Moscow in the gas sphere.

“Obviously Russia and Iran, as far as gas goes, potentially they’re competitors in the European market if Iran ever manages yet to get some pipeline through Turkey and then through Iraq ultimately to Europe,” Kokin said.

“It’s always a question of how Gazprom or any other Russian company is going to maneuver between getting into joint projects and, on one hand, benefiting from these projects and, on the other hand, potentially cannibalizing its own operations, its own exports to Europe as well as LNG (liquefied natural gas) exports. So it’s always a difficult dilemma for Russians,” the UralSib oil and gas expert explained.

He reminded that there are also oil investments in Iraq and Kurdistan. “Those Iraqi investments have been around for a while and in Iran, as far as I know, there interest from some Russian oil companies such as LUKoil in investing in Iran but it seems to me it’s at a very early stage,” he said.

Gazprom and Iran’s Ministry of Petroleum have signed the Memorandum of Understanding for strategic cooperation in developing Iranian gas fields with subsequent gas transportation and monetisation.

Gazprom and NIOC signed the following documents: the Memorandum of Understanding for hydrocarbon prospecting, exploration and production within Iran; the Memorandum of Understanding for collaboration within the construction project for the Iran – Pakistan – India gas pipeline; the Memorandum of Understanding for developing a concept for a unified system of gas production, transmission and petrochemistry based in Iran.

Gazprom and Industrial Development & Renovation Organization of Iran, a state-owned subsidiary of Iran’s Ministry of Industry, Mine & Trade, inked the Memorandum of Understanding for joint gas liquefaction projects slated to be implemented in third countries, as well as projects in the field of advanced gas processing and petro-chemistry in the territory of Iran.

According to Gazprom, the first phase of the Iran LNG project provides for the construction of two gas liquefaction trains with the annual capacity of 5.25 million tonnes each. During the second phase, the facility’s output will be increased to 21 million tonnes per year upon the construction of two additional process trains. Iran LNG Сo serves as the project operator, with NIOC and Oil Industry Pension, Saving and Staff Welfare Fund as the main shareholders.

“If Iran exports liquefied natural gas (LNG) potentially it’s going to compete with Russian gas,” Kokin said. “So it’s a bit of a difficult situation.”

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