The Islamic Republic has long been on very friendly terms with Belarus, which is often described as the last dictatorship left in Europe. Some see it as an alliance of pariahs.
But now the state oil company, Belarusneft, is joining the throngs of Western European firms leaving Iran. The cause appears to be a dispute over how to handle—and finance—the oilfield development, though US sanctions imposed on Belarusneft may have been an extra incentive.
Iran and Belarusneft signed a contract in September 2007 under which the company was to invest $250 million in Jufayr, which is in Ilam province near the Iraqi border, to bring about production of 3,500 barrels a day of oil. That is a very small volume that amounts to less than 1/10th of 1 percent of Iran’s daily output.
But when Belarusneft finished the first phase of the development, the output was a mere 2,800 barrels a day, the Interfax news agency of Russia reported. That was 20 percent below the goal.
Alexander Sharayev, the firm’s deputy director for foreign production, told Interfax, “Belarus is withdrawing from this project.”
Belarusneft was sanctioned in March by the United States for signing the Jufayr contract. Interfax said Sharayev declined to answer questions about whether the US sanctions had any impact on the decision to withdraw from Iran.
In Tehran, the Tehran Times reported that the National Iranian Oil Co. (NIOC) had warned Belarusneft it was prepared to stop the contract because of disagreements over how to develop Jufayr. The Tehran Times story failed to explain what the disagreements were.
Belarusneft did not contradict the Tehran Times story, however. In a statement posted on its website, it said, “The option to terminate the contract after the end of any phase was stipulated in the contract.… As the work proceeded, new data about the field’s geological structure was received. It called for changes in technical, financial and economic conditions of the project implementation. In view of this, Belarusneft has decided to quit the contract after the first phase.”
The statement did not say how much money Belarusneft had sunk in the project and whether it would recover any of it. The contract was the standard buyback system used by Iran under which an investor is paid back his capital and a profit margin by taking crude oil when the field begins to produce.
Interfax quoted a media report it did not identify as saying, “A serious disagreement with regard to methods and technology of carrying out the work, as well as compensation to the Iranian party for the use of its oilfield by Belarusneft arose.”
