The National Iranian Oil Company’s procrastination in developing joint hydrocarbon fields in the Persian Gulf has helped Arab neighbors to extract as much as they can from the shared reserves, the head of the Board of Directors at the Iranian Oil and Gas Drilling Companies Association said.
"The state-run firm’s inaction and deferment of development projects in the fields is so obvious that it seems they have abandoned them to be used by other countries," Hedayatollah Khademi was also quoted as saying by ILNA.
If Iran does not start extracting oil and gas soon from joint fields like Arash and Farzad A, investing in them will no longer make economic sense as the neighbors, including Saudi Arabia and Kuwait, are emptying the reserves, he added.
Khademi regretted that the country, which drilled the first wells in the shared reserves, has been lagging behind other tiny Arab neighbors who are extracting huge volumes of oil and gas from the fields.
According to the official, NIOC insists that shared fields should be developed with the cooperation of beneficiaries, but the Arabs do not believe so and have started to withdraw from the fields with the help of international oil giants and without respecting Iran’s rights.
"Expecting Saudi Arabia to collaborate with Iran on development initiatives in joint hydrocarbon fields is nothing more than wishful thinking, as the oil-rich state is our arch-rival when it comes to oil and gas,” he said.
Although Saudi Arabia has set up rigs in the Arash Gas Field in the Persian Gulf and will start extracting oil and gas in the near future, NIOC has not even finished its comprehensive studies.
“Arash Gas Field is not the only shared reserve that is being emptied by neighbors,” he said, adding that NIOC’s wrong policies and postponement of operations has given a perfect opportunity to Arabs to tap into the reserves without having the least concern about Iran.
The joint field is shared by Iran, Kuwait and Saudi Arabia. It is called al-Durra field by the two Arab countries.
The Kuwait Oil Company announced that the field is expected to produce 28 million cubic meters of natural gas per day and 84,000 bpd of gas condensates, which will be divided equally between the two partners.
Neutral Zone
Kuwait and Saudi Arabia have signed an agreement to develop the offshore gas field in the Partitioned Neutral Zone that Iran claims is in its waters.
Following the measure taken by the two Arab states, Owji said, “Although we are willing to hold talks and cooperate to develop the joint field, unilateral measures will not stop us from doing so.”
Discovered in 1962, the Arash field’s gas reserves have been estimated at 28 billion cubic meters along with 310 million barrels of oil.
Iran began talks with Kuwait in 2000 to develop the field but no agreement was reached. In 2013, the National Iranian Oil Company said it had jackets and rigs ready to develop the field and if talks did not lead to a development plan, it would have the right to go ahead alone.
Reacting to the agreement between Saudi Arabia and Kuwait, the Foreign Ministry’s spokesman, Saeed Khatibzadeh, said, “The Arash/al-Durra is a joint gas field shared by Iran, Kuwait and Saudi Arabia, parts of which are located in areas between Iran and Kuwait whose water boundaries have yet to be defined.”
“Based on international regulations and procedures, any attempt to exploit and develop this field should be subject to coordination and cooperation among the three states. So the recent move by Kuwait and Saudi Arabia, based on a cooperation document, is illegal and goes against the ongoing procedures and previous talks. Iran does not approve of it,” he added.
Khatibzadeh said Iran is ready to negotiate with the two Arab countries over the exploitation of the joint field, and to continue bilateral talks with Kuwait within the framework of the previous negotiations over the demarcation of the continental shelf.
“Iran also reserves the right to develop the gas field alone,” he added.
Economic Ties
Commenting on the issue, Iran’s deputy oil minister for international and commercial affairs, Ahmad Asadzadeh, said Iran believes shared fields should be carried out jointly, which would strengthen economic ties among the countries concerned.
“Even if the border is not demarcated, the field can be developed jointly using internationally tested models. Iran had delayed developing the shared field in anticipation of a decision on the demarcation of the border with Kuwait. But as the other side, regardless of the previous talks, is unilaterally moving to develop the field, there is no reason for delay,” he said.
Some 23 Iranian hydrocarbon fields lie in border areas and are shared between Iran and adjacent countries, including Kuwait, Iraq, Qatar, Bahrain, the UAE, Saudi Arabia and Turkmenistan.
Most of Iran’s oil and gas fields lie on a belt running through its maritime boundary in the Persian Gulf and the foothills of Zagros Mountains – an extensively jagged zone that is geologically the result of the Arabian plate's collision with the central Iranian plateau.
The collision has trapped thick layers of ancient limestone and sandstone and turned them into some of the world’s biggest oil and gas accumulations.
