CORRECTED: Iran excludes Gazprom from Azar oil field

Iran has cancelled plans for Russia’s Gazprom to develop its Azar oil field because of “repeated” delays and awarded it to domestic contractors, a financial daily reported on Monday.

“Unfortunately, the Russian Gazprom company delayed fulfilling its undertakings and NIOC had given it repeated warnings, which were never heeded,” Donyaye-e-Eqtesad quoted National Iranian Oil Company head Ahmad Qalehbani as saying.

“It was decided that we terminate our cooperation with this company in the Azar oil field, and assign the project to domestic contractors,” he said.

Gazprom and NIOC signed a November 2009 memorandum of understanding to develop the southwest Azar field, which straddles the border with Iraq.

The field holds an estimated two billion barrels of oil, 40% of which belongs to Iran, according to oil experts.

Gazprom Neft, the oil unit of Russia’s state-controlled gas producer Gazprom, was to evaluate the project’s technical and economic feasibility before preparing a full-fledged contract.

But in recent months, as Western sanctions on Iran’s oil and gas sector ratcheted up, Tehran repeatedly accused Gazprom of dragging its feet to sign the final contract.

The sanctions, along with US and European pressure, prevent any investment, technology transfer or sale of equipment in Iran’s vital petroleum sector.

Iran, OPEC’s second-biggest oil producer after Saudi Arabia, depends on oil exports for 80% of its foreign exchange.

In the past two years, most major Western giants have left Iranian projects, to be replaced in many cases by Chinese and domestic companies.

The United States has stepped up pressure on Iran’s major partners such as Russia, China, Turkey and the United Arab Emirates to persuade them to step behind the Western sanctions, which also hit the banking sector.

The Islamic republic is under four sets of UN Security Council sanctions over fears that Tehran is seeking to build an atomic bomb under the guise of its civilian nuclear power programme, despite repeated denials by Tehran.