Tatneft eager to gain foothold in Iran

Tatneft, Russia's sixth largest oil producer based in the Republic of Tatarstan on the Volga, has signed a memorandum of understanding with two Iranian partners, the National Iranian Oil Company (NIOC) and social welfare fund Bonyad Mostazafan, or the Oppressed Foundation.

Analysts say the memorandum, which will enable the Russian company to enter the Iranian oil market, covers three deposits which the sides discussed last June.

Tatneft came to Iran in 2002, when it signed an agreement with Iran's Petroleum Institute on the sale of oil processing technology and equipment and a $1 million contract for testing equipment to increase oil recovery.

A year later, the Russian company started seismic surveys at one of Iran's deposits and began a search for fresh water.

In 2005, Tatneft and the Oppressed Foundation set up a joint venture, Pars Tatneft Kish, to prospect for and develop oilfields. The Russian company was to invest $500 million in oil production, but has not signed a single contract since the establishment of the joint venture.

The Iranian media reported last June that Tatneft, Iran's Petroleum Ministry and the Oppressed Foundation held talks on joint oil production at three deposits in the provinces of Chaharmahal and Bakhtiari, and Kohgiluyeh and Boyer-Ahmad.

Iranian Oil Minister Gholamhossein Nozari said plans included seismic surveys, drilling of exploration wells, and calculation of the economic feasibility of developing the deposits.

The sides did not announce the possible production volumes.

Vitaly Kryukov, an analyst with the Kapital investment group, said the memorandum probably outlined Tatneft's involvement in the development of the deposits, because oil there is similar in terms of viscosity and high sulfur content to that which Tatneft produces in Russia.

"This will allow the Russian company to provide technical support for the project, exactly what Iran needs," Kryukov said.
Konstantin Simonov, head of Russia's National Energy Security Foundation, said Tatneft's foray into Iran would not benefit it economically, given the political tensions in the country.

In his opinion, the company should focus on Russia, where there are many unfinished projects.

Tatneft recently rejected an offer by Shell to assist in the production of bituminous oil in Tatarstan, claiming that it can implement the project without foreign assistance, Simonov said.

Source: RBC Daily - October 21, 2008.