Iran Starts Drilling At Oil Field Shared With Saudi Arabia

Iran will soon begin the development of the Esfandiar oil field, which it shares with Saudi Arabia, which calls it Lulu, Iranian media have reported, citing the managing director of the Iranian Offshore Oil Company.

"According to the scheduled program, it is predicted that the executive operation of the first phase of the development project will be carried out within 36 months," Alireza Mehdizadeh said, adding the first phase will involve the drilling of four wells.

The official also said the Iranian Offshore Oil Company would also drill exploratory wells at Esfandiar to determine the next phases of the field's development.

Production from Esfandiar is expected to begin within the next three years.

Because of U.S. sanctions, Iran is developing its oil and gas resources alone, which might mean they take longer to develop. Yet the country seems determined to develop these resources now that the supply situation is quite tight.

Meanwhile, exports are on the rise as Iranian crude sells at a discount to Russian crude, tanker tracking data showed. Most of the crude Iran exports still go to China, much like Russian crude shunned by Europe.

Yet Europe is eager to have some Iranian oil flow its way after it decided to sanction Russian oil. It could be why the European Union is so active in trying to broker a new nuclear deal between Tehran and Washington.