The National Iranian Oil Company and Zarubezhneft signed a nondisclosure agreement on Wednesday as part of a deal that will allow the Russian state-run oil company to conduct studies to develop two of Iran's joint oilfields with Iraq.
The agreement was signed by Ali Kardor, the newly-elected managing director of NIOC and Sergey Kudryashov, Zarubezhneft's general director, in Tehran, Mehr News Agency reported.
According to Kardor, Zarubezhneft, a Moscow-based oil enterprise that specializes in exploration, development and operation of oil and gas fields, will conduct technical surveys on Aban and West Paydar oilfields and will submit its proposal to enhance oil recovery in the fields.
Aban Oilfield, in Ilam Province, and West Paydar,in the province of Khuzestan near the Iraqi border, are among the country’s largest energy projects in the post-sanctions era.
Kardor said this is the first time the Russian company is involved in Iran's upstream oil projects. "Russia's top natural gas producer, Gazprom, played a key role in developing Iran's South Pars gas project."
"In case the cooperation contract is finalized, the terms will be based on the new Iran Petroleum Contract (IPC) model, in which transfer of technology and state-of-the-art machinery and equipment to Iran have been highlighted," Kardor said.
He added that the Russian firm will have to pick an Iranian partner to be able to play a role in Iran's lucrative energy market.
Highlighting NIOC's interest in trading crude with Zarubezhneft, the official added that plans have been made to facilitate the cooperation between the two sides by setting up an office in Tehran.
Technology Transfer
Attaching importance to technology transfer, Kardor stressed that the process will take place in three phases, the first of which will be in the field of exploration and production (E&P), known as the upstream sector of the oil and gas industry. This phase also includes reservoir engineering, a branch of petroleum engineering that applies scientific methods to deal with extraction problems in developing oil/gas fields.
"The second phase starts with the presence of oil service companies like drilling firms that prepare the detailed engineering design of the project, procure equipment and materials and then deliver a functioning facility or asset to their clients," he said, noting that the second phase paves the way for not only joint ventures but also long-term strategic initiatives.
According to Kardor, the third phase in technology transfer is manufacturing cutting-edge oil and gas equipment, namely compressors and turbines which should comply with international standards.
Kardor believes that not only can the two companies collaborate in developing upstream sector plans, but also consider the possibility of cooperating in refining development projects as well as oil and gas swap operations.
Referring to Zarubezhneft's half-a-century-old experience in energy sector, Kudryashov said that the company formulates unique strategies to treat different wells in different oilfields separately to ensure maximum recovery.
Commenting on the company's viable alternatives to develop complex reservoirs, he said despite the low oil prices, Zarubezhneft remains committed to fulfilling its international commitments.
Assessing energy cooperation between the two sides as positive, the Russian oil official added, "We will strive to implement the initiative in the shortest period of time possible so that it yields mutual benefit."
Agreement with Total
NIOC and France's Total signed a similar nondisclosure agreement in April, based on which the French major will propose its strategy to develop Iran's giant South Azadegan Oilfield.
Nonetheless, Total is not expected to be the sole foreign contractor in South Azadegan; the field’s second development phase reportedly requires $5 billion in investment, with some big names in negotiations for its drilling and production rights, including France's Entrepose Contracting and VINCI Construction Grands Projets, South Korean conglomerate Hyundai and Japan’s Marubeni.
Iran has plans to produce 320,000 barrels of oil per day from the joint field.
The right to develop South Azadegan is apparently part of a package deal that also includes the export of 150,000 to 200,000 barrels of oil per day to Total, with the former agreement publicized in January.
