OMV, Iran's Dana Energy Co Sign E&P Agreement

Austria's major integrated oil and gas company, OMV, has signed a preliminary agreement with Iran's Dana Energy Co for collaboration in upstream oil and gas exploration/production sector.

The agreement was signed at OMV's headquarters in Vienna on Jan. 20 by Johann Pleininger, member of the OMV executive board, and Seyyed Mostafa Khoui, member of Dana Energy board of directors and head of the E&P department, Shana reported on Wednesday.

Neither company commented on the scale and scope of the cooperation.

The agreement is part of efforts to ease the return of foreign oil and gas majors to Iran's  energy market after years of underinvestment and economic isolation. 

The Oil Ministry has stipulated that multinationals must choose an Iranian partner in future oil and gas projects if they want a share in the huge energy projects.

The ministry hopes the link-up will help domestic firms gain expertise in E&P sector and gradually transform into recognized international oil and gas contractors.

Dana Energy is a private oil and gas company based in Tehran. It is active in exploration and production, upstream services and energy trading.

The company is engaged in the exploration and development of oilfields in central and southern Iran and also development of the giant South Pars Gas Field in the Persian Gulf. It is Iran's largest private oil and gas company, according to its website.

Dana Energy was among the first group of domestic companies certified in July for cooperation in future oil and gas projects alongside foreign contractors. So far, a total of 11 companies have been approved as eligible energy contractors at home.

OMV reportedly started operations in Iran in 2001 as the operator of the Mehr exploration block in the west of the country, but halted operations in 2006 due to sanctions.

But the Vienna-based company actively resumed negotiations for a place in post-sanctions Iran after Tehran and the world powers sealed a landmark deal in July 2015 on curbing the country's nuclear activities in exchange for lifting the financial and trade restrictions.

OMV, which is 31.5% state-owned, is one of Austria's largest listed industrial companies with a workforce of around 25,500. It operates a major domestic gas pipeline network as well as gas storage facilities in Austria and Germany.

In May, it signed a memorandum of understanding with the National Iranian Oil Company to study Cheshmeh Khosh and Band-e-Karkheh fields in the southern Khuzestan Province. It is also studying oil-rich regions in the Zagros area in western Iran.

OMV has qualified for bidding in Iran's upcoming oil and gas tenders, but Rainer Seele, OMV's chief executive officer, says he is unsure about his company's future in Iran.

"We can make an investment decision only when we really know what the framework and the conditions are," Seele said in Sept., referring to Iran's new model of oil contracts, officially known as Iran Petroleum Contract, which is to be used to develop dozens of oil and development projects. Tehran has yet to sign the first IPC deal despite lifting the curtain on the framework two years ago.

OMV imported 1 million barrels of Iranian crude in Sept., its first purchase since 2012 when tougher sanctions were imposed on Iran's economy and the key energy sector.