Lukoil to Help Iran Tap Caspian Sea Fossil Fuels

Lukoil signed two preliminary agreements with the National Iranian Oil Company on Tuesday to study the Caspian Sea's oil and gas potentials, paving the way for Russia's second-largest oil producer to further cement its position in Iran's petroleum market.

The agreements were signed in Moscow in the presence of Lukoil CEO Vagit Alekperov and Oil Minister Bijan Namdar Zanganeh who traveled to Russia for the 19th ministerial meeting of the Gas Exporting Countries Forum, the NIOC news portal reported.

Iran's Ambassador to Moscow Mehdi Sanaei also attended the signing ceremony. The previous GECF meeting at the ministerial level was held in Doha, Qatar in Nov. 2016.

The agreement is to "perform a geological survey in the Caspian Sea" to unlock Iran's massive hydrocarbon reserves in one of the world's biggest offshore oil and gas regions, NIOC said.

A memorandum of understanding was also signed between Lukoil and Khazar Exploration and Production Company, a subsidiary of the state-owned NIOC, Sputnik reported, citing an oil industry source.

According to the source, the documents were signed after several months of negotiations on conducting geological exploration in the southern part of the Caspian Sea.

The deals are emblematic of Tehran-Moscow's close ties as well as the increasing foray of Russian companies in Iranian oil ventures.

Gazprom, the world's largest gas supplier, is highly tipped to secure the drilling rights for a major gas field in the Persian Gulf and beat an Indian consortium that has long sought to take on the gas project.

Now Lukoil is poised to help Iran tap into its fossil fuels in the north, where the country has produced zero barrels and no amount of gas despite sitting on the world's fourth-biggest crude and second biggest natural gas reserves.

Iran's energy map shows investments in oil and gas fields have been mostly concentrated in southern regions, where it shares the giant South Pars Gas Field with Qatar in the Persian Gulf and several oilfields with Iraq.

Russia's Gazprom Neft is also working with Iran on three projects: Farzad-B, Kish and Azar. The company signed a memorandum of understanding in July to evaluate and study oilfields in Iran.

Lukoil has also been in talks with NIOC on taking part in the development of Abteymour and Mansouri fields in central-western Iran. Tehran has said it expects to sign deals in the next five to six months with Russian firms, such as Lukoil, on developing Iranian oil and gas resources.

The Moscow-based company reopened its Tehran office in April last year and has been reportedly pushing for development rights of Iran’s Azar Oilfield following Tehran's nuclear deal with six world powers and its ensuing implementation in early 2016.