Western Sanctions May Hamper Russian-Iranian Offshore Gas Production Plans - Rystad

MOSCOW (Sputnik) - Iran and Russia face challenges developing offshore Iranian gas fields as Western sanctions against both countries are likely to hamper their ability to source corrosion-resistant tubing, Norwegian energy research company Rystad Energy said Monday.

Russia’s Gazprom and National Iranian Oil Company struck a $40 billion deal in July to develop oil and gas fields in Iran. Rystad said that Iran’s sour gas fields required them to procure corrosion-resistant alloy and tubing of sufficiently high grades.

"The corrosive nature of Iranian oil and gas reserves requires high-grade piping for extraction, which neither Russia or Iran have the capacity or capability to produce in the short term. Indeed, the supply chains for these goods are mostly centered in countries applying sanctions on both states," Rystad Vice President James Ley said in an analysis.

The research said it would take a considerable amount of time and investment for Russia’s steel industry to be able to move to significant commercial production of high-alloy grades, with the market being cut off from European billet supply. This means that the scope for quick development of Iranian gas fields will remain limited until sanctions are lifted, it concluded.