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Iran, Russia ink $1 billion oil rig deal

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
This file photo shows Iran's Amir Kabir semi-submersible drilling rig.

Russian shipbuilder Krasnye Barrikady and an Iranian company have signed a deal worth $1 billion to build five offshore drilling rigs for oil and gas exploration in the Persian Gulf. 

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

The project will be jointly financed by Russia and Iran, and put the Islamic Republic 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 said. 

Krasnye Barrikady officials have already said Iran will make a 15 percent down payment on the $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 been realized,” Mousavi said.

An Iranian man points to an oil production platform at the Soroush oil fields in the Persian Gulf. (Photo by Reuters) 

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."  

"One of the problems which has caused Iran's oil production to fall short of a desirable level is due to the dilapidation of drilling rigs and their need for new vital parts," Mousavi said.

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

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