Iran Plans First Foreign Oil Pact Since Trump Left Nuclear Deal

(Bloomberg) -- Iran plans to sign a $1.16 billion agreement with the U.K.’s Pergas Resources International Ltd. to work on a southern oil field, marking the Persian Gulf nation’s first energy venture with a foreign company since U.S. President Donald Trump ripped up the Iran nuclear deal.

London-based Pergas and state-run National Iranian South Oil Co. will sign a “heads of agreement” to develop the Karanj oil field in Khuzestan province, the National Iranian Oil Co. said. A ceremony is planned in Tehran on Wednesday evening, with Oil Minister Bijan Namdar Zanganeh scheduled to attend, it said. Pergas provides oil and procurement services in the oil and gas industries.

Financing will not be coming from any U.S. company or any U.S. affiliated company or any company that is involved in the U.S., said Clint Elgar, chief executive officer of Pergas. The proposed agreement is for 10 years, he said. Pergas currently has 10 projects in the Middle East, with three in Iran, he said.

Trump last week pulled the U.S. out of the 2015 nuclear accord that had eased sanctions on the Islamic Republic nation in exchange for curbs on its nuclear program. Companies with ties to the U.S. that are doing business in Iran have 180 days to get out of oil deals with the Middle East producer or face sanctions.

Karanj is producing 127,000 barrels of oil a day, and Iran plans to use gas injection to boost that to 200,000 barrels a day over 10 years, the NIOC said. The field was discovered in 1963 and production began the following year, it said.

©2018 Bloomberg L.P.