Iran, Saudi Arabia ink deal to develop joint oilfield....

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....

Iran has warned Kuwait that it will unilaterally proceed with full-scale drilling at the disputed Arash gas field in the Persian Gulf, if Kuwait fails to agree on joint development. The warning comes amid heightened tension in the Persian Gulf between Iran and its neighbours as well as the US.

Head of the Iranian Offshore Oil Company Mahmoud Zirakchianzadeh told state media that “if Iran's positive diplomacy is turned down, we will be carrying on our efforts at Arash field unilaterally”. There was no immediate response from Kuwait. The Iranian statement comes just two weeks after a senior Iranian MP accused Arab states of stealing oil and gas from shared fields in the Persian Gulf.

Emad Hosseini specifically referred to the Arash field in his comments, in which he accused Saudi Arabia, Kuwait and the United Arab Emirates of working together to exploit joint fields to Iran's cost .There are at least fifteen fields shared between Iran and its Gulf Arab neighbours, many lying close to maritime boundaries which are themselves often in dispute.

Negotiations on the Arash field have been ongoing since 2006, when Iran and Kuwait agreed in principle to jointly develop the field. In March 2010 they re-confirmed their commitment to joint development, but at the beginning of last month Tehran announced that it would begin drilling four wells at the field.

The maritime border between Iran and Kuwait remains unconfirmed, despite numerous rounds of talks between the two sides. Although essentially a technical issue, political tensions in the Gulf and the presence of joint gas fields has stymied progress on defining the border....