Russia, Iran signs US$1 bn oil rig deal

A US$1-billion deal to build five offshore drilling rigs for oil and gas exploration in the Persian Gulf has been signed between an Iranian company and Russian shipbuilder Krasnye Barrikady.

Signed with Iran’s Tasdid Offshore Development Company (TODC), the deal envisions the construction of each drilling rig over two years in the port city of Khorramshahr, TODC Managing Director Ehsanollah Mousavi said.

The two countries will jointly finance the project. It will also put Iran among the countries capable of building drilling rigs.

“According to the timetable, domestic share in the construction of the first drilling rig will be 58%. This share will gradually rise during the execution of the project with technology transfer into the country,” Mousavi said.“The project financing will be done by the Russian company. The return of investment will come from the leasing of the rigs to the country’s oil and gas projects, with the investment and profits planned to return in five years,” he addded.

Krasnye Barrikady officials have already said Iran will make a 15% down payment on the US$200 million price of the first rig.

Mousavi signed the agreement with Krasnye Barrikady CEO Alexander Ilyichev, lending a fresh momentum to Iran’s oil and gas development, including its massive South Pars field.

Iran is developing the South Pars gas field which the country shares with Qatar in several phases, with US-led sanctions forcing the country to rely on its own capabilities to implement the megaproject.

“When South Pars started, nobody imagined Iran could enter the field of building oil equipment including platforms, installation of offshore pipelines and constructing jackets. But today, Iran has attained these capabilities.

“With the signing of this deal today, Iran’s dream of building jack-ups has also realized,” Mousavi said.

He also cited the formation of a “cooperation triangle” between Iran, Russia and China for the overhaul of drilling rigs, saying the first regional hub for the overhaul of offshore and onshore oil rigs will open in Khorramshahr “in cooperation with a reputable Chinese company.”

Mousavi also said that one of the problems that caused Iran’s oil production to fall short of a desirable level is the dilapidation of drilling rigs and their need for new vital parts.

Russia and Iran have signed several agreements for energy cooperation, including on building power plants, oil exploration and production and trade of petroleum products.