Zarubezhneft bucks sanctions by selling Iran venture to Russian state enterprise — sources

TASS – Russia’s oil producer Zarubezhneft that had entered into contracts on developing two fields in Iran in March 2018, quit those projects prior to the US sanctions kicking in by selling them to the Russian federal state unitary enterprise, Promsyryeimport, a source close to the transaction told TASS.

Trump’s new anti-Iran sanctions will go into effect on November 4, and they restrict cooperation with the country, particularly in the oil sector.

According to the source, Zarubezhneft sold its ZN-Vostok enterprise founded for operations in Iran, to the state-run company. “The enterprise has been sold together with the personnel, and the contracts on the balance sheet,” he said, adding that the company did not sustain major losses since there had been no real expenses shelled out on the projects yet.

The source explained that fundamentally the ventures have not been put on hold. “Russia remains in the projects through Promsyryeimport,” and thanks to that it is retaining, “control over the projects, and all formulated plans remain in force,” he noted.

Zarubezhneft was the first Russian company to ink final contracts for the development of two oil fields in Iran – Aban and Western Paydar – in March 2018. The amount of money poured into the projects was estimated at $740 mln, contracted for a term of 10 years. It was planned to reach annual output of up to 2 mln tonnes.

Promsyryeimport is the operator of the ‘oil-for-goods’ program resumed by Russia and Iran in 2017. This arrangement was hammered out during the previous round of anti-Iran sanctions. The oil purchased from Iran is used for being resold on other markets, with Tehran spending the earnings to purchase Russian technologies and goods. The issue was about volumes of 100,000 barrels per day, or 5 mln tonnes per year.