10.01.12 Iran Strategic Focus Iran, Saudi Arabia ink deal to develop joint oilfield

Iran and Saudi Arabia have agreed to develop a gasfield which straddles their mutual maritime border, a rare positive sign amid growing military tensions in the Gulf and other disputes over divided resources.

Iranian Oil Minister Rostam Qasemi said on 6th January that Tehran and Riyadh have already signed a deal to develop the Farzad A field, which is shared between them. They are also set to sign a deal on developing the nearby Farzad B gasfield as well as the Arash oilfield. Development plans for all three fields will be released before mid-March, according to the National Iranian Oil Company (NIOC).

The news about the Arash field is somewhat surprising: very recently, the Iranian government announced that it would begin unilaterally developing the field (which lies between Iran, Saudi Arabia and Kuwait) unless Kuwait finally agreed to joint development. That announcement followed a warning by a senior Iranian MP that Arab states were 'stealing' Iranian energy reserves from disputed fields.

Jointly developing the fields is part of an Iranian strategy to increase domestic gas and oil production in the face of tightening international sanctions. Iran is also rushing ahead with production on the giant South Pars field (shared with Qatar), where NIOC is working around the clock to bring subsequent production phases onstream.

Building a healthy working relationship with the Saudis will also help to reduce tensions between them over Iran's nuclear programme and its threats to close the Strait of Hormuz in reaction to any Western or Israeli airstrike. Iran's stance has alarmed Gulf Arab states, so working together on energy production will help to reassure Riyadh that Tehran is committed to a normal relationship:

Sources: Tehran Times, BBC