Russia’s state-controlled Zarubezhneft signed an agreement in Tehran on Wednesday to re-develop two oil fields in western Iran.
It was the second post-sanctions oil contract awarded to Russia by Iran.
Based on the agreement, the Russian firm would re-develop Aban and West Paydar oil fields.
Both fields are located in areas bordering Iraq and are considered as among high-priority fields.
Zarubezhneft would use an investment of above $740 million to use the latest technologies to improve the recovery rates of Aban and West Paydar.
It would team up with Iran’s Dana Energy in a twin project meant to increase the collective output at the fields to as high as 48,000 barrels per day (bpd) from the current level of 36,000 bpd within the next 10 years.
The Russian company would have an involvement of 80 percent in the project and Dana Energy’s share would be 20 percent.
Iran’s Petroleum Minister Bijan Zanganeh told reporters after the signing ceremony of the agreement with Zarubezhneft that the project would fetch Iran as much as $4 billion in national revenues.
Zanganeh added that the agreement was the first oil field development deal awarded to a Russian company and also the first oil deal sealed through the new format of Iran’s oil and gas contracts.
He emphasized that Iran would award more such contracts to international players during the new Iranian calendar year which starts on 21 March 2018.
Iran’s new format of contracts for oil sector projects would replace the old buyback deals which required the host government to pay the contractor an agreed price for all volumes of hydrocarbons it produced.
Under the new format, different stages of exploration, development and production will be offered to contractors as an integrated package, with the emphasis laid on enhanced and improved recovery.
After the removal of sanctions in 2016, Iran awarded a major agreement to the French energy giant Total over the development of Phase 11 of its South Pars gas field.
The value of the agreement is around $5 billion. Officials in Tehran recently said Total had started preliminary operations to get the project off the ground.