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Lukoil Anticipates Iran Re-Entry

Oil Rig

Lukoil President Vagit Alekperov said that his company is seriously considering reentering the Iranian energy market following the removal of international sanctions earlier this year

In remarks made to a Russian media group on 16 June, the Lukoil chief expressed interest in exporting oil and natural gas to Iran as soon as this September or October.

“It is mostly agreed on, according to my information, but there are minor details left. But as a rule, those details are always where the problems hide,” said Alekperov, alluding to the need for Russia to create a law permitting foreign investment in Iranian projects.

Alekperov believes Lukoil could pursue “exploration projects and projects that require rehabilitation” in Iran, and expressed confidence that his company could rejoin Statoil of Norway in resuming the suspended onshore Anaran venture. Lukoil in 2010 cited U.S. sanctions as the reason it withdrew from the plan in 2010. Anaran encompassed four sites holding estimated reserves of two billion barrels of oil.

Nevertheless he detailed a series of preconditions prior to potentially resuming the venture.

“The previous buy-back conditions would be unacceptable today because they don’t stimulate investors and don’t allow them to take the acceptable risk we’ve always allowed ourselves under production sharing contracts or joint ventures,” he declared.

As mentioned by OilPrice.com on June 15th, international sanctions against Iran were lifted last January following the shutdown of the country’s controversial nuclear program. The regime under Hassan Rouhani has attempted to restart trade ties with countries such as Russia in an attempt to rebuild an oil industry hamstrung by sanctions. Bilateral economic ties have strengthened though Iran’s ambassador to Russia called for the expediting of trade relations

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Aside from referring to Iran, Alekperov said Lukoil could sell off its four European refineries that are located in Bulgaria, Romania, Italy, and the Netherlands. Lukoil in recent years has concentrated mainly on the exploration of gas and oil fields; thus, he doesn’t view the refineries as “strategic” assets.

Lukoil might sell part or all of its oil refining business in Europe or potentially spin off its oil refineries in a separate entity and seek to attract investors into it, according to Alekperov.

By Erwin Cifuentes for Oilprice.com

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