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:

Sources: Tehran Times, BBC

Iran, Saudi Arabia and Kuwait meeting over maritime boundary dispute

Amid a sudden deterioration in their bilateral relationship, Iran and Saudi Arabia have agreed to hold a meeting with Kuwait to settle their joint maritime border.

On 11th October, Kuwaiti foreign minister Sheikh Mohammad Al-Sabah announced that a tripartite meeting had been agreed in principle between the three sides. He said that it was “basically a technical issue but it will need a political decision from Iran, Saudi Arabia and Kuwait”. No date was set for the meeting.

Kuwait and Iran have been in discussions for years over demarcating their joint sea border, in which Saudi Arabia is also involved, with little progress. Regional political tensions and uncertainties over their respective borders with Iraq have caused major delays.

Determining who has the right to the region's continental shelf is of importance largely because of the presence of the Dorra gasfield in the disputed zone. The field is estimated to contain up to 200 bcm of natural gas.

At present, all three states share the Dorra field. Kuwait has been actively working on developing its share of the field, and in April a senior executive from Kuwait Petroleum Corp said that a plan to start drilling by 2013 was still on schedule. Kuwait has, however, been cautious in proceeding due to the lack of agreement over ownership.

The plan to resolve the outstanding technical issues of the joint maritime border comes as relations between Tehran and Riyadh hit a new low. News of an alleged plot by Iranian agents to assassinate the Saudi Ambassador in Washington has prompted fears of a new phase in the 'cold war' between the two regional powers.

Although unlikely to directly affect the border negotiations, a crisis in relations between Iran and Saudi Arabia would make it more difficult for them to agree on sharing the resources of the Dorra field.

Sources; Al Arabiya, AFP