Shell Poised to Win Iran's Kish Gas Field Contract

Tehran may have to scrap plans for holding an international tender to develop a natural gas field in the Persian Gulf as foreign companies have shown little interest in taking on the upstream exploration project.

"Royal Dutch Shell is the only foreign company to show interest in developing the Kish gas field. Therefore it is likely that we will negotiate and award the field's development contract to Shell in lieu of a tender," Noureddine Shahnazizadeh, chief executive of Iran's Petroleum Engineering and Development Company (PEDEC) said, IRNA reported on Sunday.

"Shell has signed a memorandum of understanding to study the field in six months. It has four months to submit its plans. An Iranian company has also expressed readiness to finance the field's development, but the tender so far is in doubt."

Kish field is part of a trio of oil and gas fields that Shell is studying under an agreement it signed with PEDEC in December. The Anglo-Dutch company is also conducting technical surveys on the South Azadegan and Yadavaran oilfields which are shared between Iran and Iraq.

The agreement was signed by Hans Nijkamp, the head of the department for Iran affairs at Royal Dutch Shell, and Shahnazizadeh in Tehran.

Discovered in 1968, Kish gas field is located 30 kilometers east of Lavan Island in the Persian Gulf. The field holds an estimated 1.3 trillion cubic meters of natural gas in place and more than 500 million barrels of gas condensate, an ultra light grade of oil.

Kish field is planned to be developed in five phases, with the first phase reportedly making some progress. It is the second biggest gas field in the Persian Gulf after the giant South Pars field that is shared by Iran and Qatar.

The announcement by Shahnazizadeh sends the signal that Iran's new oil and gas development projects have received a lukewarm response by multinationals despite Tehran's high hopes to attract foreign investment and technology in its key petroleum industry, using a new model of contracts.

Foreign companies are also getting cold feet about investment in Iran following growing discord between Tehran and the Trump administration that led to blacklisting several Iranian entities and individuals last month.

Major foreign companies, most notably France's Total and German chemical producer BASF, have said their plans in Iran hinge on the future of sanctions.