Zanganeh Underscores Fairness in Oil Contracts

All foreign companies interested in Iran’s oil and gas projects must participate in tenders, Oil Minister Bijan Namdar Zanganeh said, signaling that Tehran will uphold a level-playing field in the race for its lucrative energy market.

Asked on the possibility of handing over the South Azadegan Oilfield project to French oil and gas giant Total, Zanganeh said, “We have not reached a final agreement with Total on developing the oilfield,” Mehr News Agency reported.

Azadegan is located in the southwestern Khuzestan Province. The oilfield is separated into northern and southern sections on the Iranian side, with oil-in-place reserves of about 33.2 billion barrels, of which 6 billion barrels are deemed recoverable.  

“The South Azadegan Oilfield development plan will be tendered in the near future,” he added.

Stressing that Iran has signed a handful of memoranda of understanding with foreign contractors to study its joint oilfields, Zanganeh recalled that the agreements are yet another indication that there is no favoritism when it comes to selecting international partners for developing the key hydrocarbon sector.

Zanganeh recently said that foreign oil and gas companies can establish consortiums to jointly develop South Azadegan, however, "the consortium must have an Iranian partner."

The ministry has approved 11 domestic firms as contractors for upstream oil and gas projects under the new model better known as the Iran Petroleum Contract.

The firms include Ghadir Investment Company, Pasargad Development Company, Petro Gohar Farasahel Kish Co, Petropars, Oil Industries Engineering and Construction (OIEC), Setad Ejraiye Farmane Emam, Dana Energy Company, Petroiran, MAPNA Group, Khatam-al Anbia as well as the Industrial Development and Renovation Organization of Iran (IDRO).

According to Mehr, in addition to Total, Anglo-Dutch energy company Royal Dutch Shell, Russia’s Rosneft and Japan’s oil company INPEX Corporation have so far signed preliminary agreements to carry out technical studies on several oilfields, including the sought-after Azadegan field.

Estimates suggest that to develop the second phase of South Azadegan, aimed at a daily production of 300,000-320,000 barrels of crude oil, about $5 billion in investment is needed.

The oilfield is reportedly producing 50,000 barrels of oil per day at present. This is planned to rise to 100,000 barrels upon the completion of the first phase by March 2017.

Officials say South Azadegan will likely be the first of dozens of projects to be tendered to multinationals in early 2017 as Iran gradually opens up its key energy sector to the outside world following the lifting of sanctions in January.