Nov 16 (Reuters) – Norwegian oil and gas company DNO is to study the development of an oil field in Iran, becoming the second western company after France’s Total to sign an energy deal in the country since the lifting of sanctions.
DNO said on Wednesday it had signed a memorandum of understanding with the National Iranian Oil Company (NIOC) to conduct a study on the development of the Changuleh oil field in western Iran.
DNO’s shares rose nearly 8 percent on the news.
Changuleh, discovered in 1999 but never developed, is estimated to hold more than 2 billion barrels of oil, the company said. DNO has operations in North Africa and the Middle East, particularly in Iraqi Kurdistan.
Total last week signed a deal with NIOC to further develop the South Pars gas field in the Gulf, the world’s largest field which extends into Qatari waters.
This second deal is seen as a boost to Tehran’s efforts to attract investment following the lifting of sanctions earlier this year.
“Iran presents an obvious and exciting next step in expanding DNO’s footprint in the region,” DNO’s Managing Director Bjørn Dale said in a statement.
Barclays analysts said: “DNO was an early mover into the Kurdistan Region of Iraq and appears to be adopting the same strategy to evaluate this development opportunity in Iran.”
“While the investment case remains focused on ongoing development in and outlook for payments from the Tawke field in Kurdistan, the MOU with the NIOC provides a view on the company’s medium-term growth aspirations.”
Western companies are keen to tap Iran’s vast energy resources but have been cautious due to uncertainty over U.S. sanctions that remain in place, contract terms and a sharp drop in oil prices since mid-2014.
The election of Donald Trump as president of the United States last week has added further uncertainty to the market.
Total said the elections will have no impact on its deal.
(Reporting by Ron Bousso. Editing by Jane Merriman)
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