U.S. Sanctions Force Rosneft to Drop Iran Plans

Russia’s oil giant Rosneft has changed its mind on cooperating with Iran, three sources linked to the state company’s top managers told business newspaper Vedomosti.

Late last year, Rosneft and the National Iranian Oil company announced plans for joint projects in oil and gas production to the tune of $30 billion and produce up to 55 million tons of oil per year. The sides signed a roadmap on implementing the strategic projects. However, the talks stopped this summer amid fears that the U.S. could slap sanctions on Iran, one of the sources told the paper. The sanctions were eventually imposed on November 6 and in particular restricted Iranian oil exports.

Another reason to leave Iran is Rosneft’s decision to change its strategy. The Russian oil company is planning to focus on growth inside Russia, another source told the paper.

Rosneft is not the first Russian company which scrapped plans to work in Iran. In early November, Zarubezhneft, a state-controlled oil firm based in Moscow, sold its operator of production projects in Iran, ZN-Vostok, to an enterprise owned by the Russian Energy Ministry.

“Apparently, Rosneft decided that the risks of working in Iran were too high,” says Vasily Tanurkov from Analytical Credit Rating Agency (ACRA).

Exports of Iranian oil have been restricted, and this is expected to last for a long time, he explained, noting that the conditions for Russian companies operating in Iran are still unclear. “Probably, given all the risks Rosneft had sought to get more profits than those offered by Iran,” the analyst told Vedomosti.