Iran and Oman have agreed to form a committee to jointly develop the Hengam oilfield which straddles both countries' sea border, according to a report today by Iran's semi-official Fars news agency.
The report cited Oil Minister Javad Owji who explained that the "Joint exploitation, in contrast to competitive exploitation, will be mutually beneficial to both countries as this method leads to less damage to the reservoir and allows for more extraction."
The development follows a similar report by Iran's IRNA news agency on Saturday during Owji's visit to Muscat where an agreement was reached with his Omani counterpart Mohammed Al-Rumhi to revive a long-stalled project to lay an undersea pipeline to carry gas to the sultanate.
A memorandum of understanding was signed in 2003 between the two countries to construct a 200-kilometre pipeline, which at the time was estimated to cost about $1.2 billion. The deal included Iran delivering ten billion cubic metres of gas per year to Oman in 2008 for 25 years, however it failed to materialise due to Western-imposed sanctions on Iran.
According to the website of the National Iranian Oil Co., which manages Iran's share of the field, the Hengam field is estimated to hold some 700 million barrels of crude oil and two trillion cubic feet of natural gas.
Despite holding the second-largest proven gas reserves, Iran's production capacity has been hampered by underfunding and sanctions. While Oman's annual gas production has grown by 4.4 per cent over the past decade, its annual demand for the natural resource has increased by 6.3 per cent.
Owji's visit to Muscat, precedes Iranian President Ebrahim Raisi's official visit to the sultanate. He has reportedly arrived in the country for a one-day visit where he was welcomed by Sultan Haitham Bin Tariq Al-Said at the airport. It is expected that the two countries will sign several trade deals.
Before Raisi's departure, he was quoted by IRNA as saying: "Trade exchanges between the two countries of Oman and Iran will improve definitely."
"Both countries are determined to upgrade the level of political and economic ties," he added.