Iran in Talks to Develop More Oil, Gas Deposits

Oil Minister Bijan Namdar Zanganeh said serious negotiations are underway to develop Iran's hydrocarbon deposits, including Azadegan, Yadavaran and Yaran, major oilfields in the oil-rich Khuzestan Province.

"Top priority has been assigned to developing joint oil and gas fields because our neighbors are drawing from the underground resources at a rapid pace," Zanganeh said on the sidelines of a Cabinet meeting in Tehran on Wednesday, IRNA reported.

Pointing to the newly-concluded contract between the National Iranian Oil Company and French energy giant Total S.A. to develop Phase 11 of the South Pars Gas Field in the Persian Gulf, Zanganeh said, "As long as they have not undertaken the whole project, including onshore and offshore sectors, no money will be paid to them. Based on the deal's terms, Total's revenue depends on the field's production."

Rejecting claims that the French giant would reap as much as 75% of the field's profit, the minister said the company will transfer $6 billion to Iran, of which $1 billion will be paid as tax. 

"Their investment return during 20 years will amount to a maximum of $12 billion. Iran's revenue from South Pars Phase 11 is estimated to reach $84 billion, as long as oil prices do not fall below $50 a barrel," Zanganeh said.

Submitting Results

The National Iranian Oil Company has received the result of studies on 26 oil and gas fields that were mostly carried out by international energy majors over the last six months, Gholamreza Manouchehri, the deputy for development and engineering at the National Iranian Oil Company, said.

"Wintershall of Germany, Austria's OMW, South Korean gas company KOGAS, Persia Oil and Gas Industry Development Company, Indonesia's Pertamina, Japan's Inpex and Denmark's Maersk Group are among majors that have presented the result of their technical surveys," he added.

Referring to the agreements with foreign firms to study the hydrocarbon deposits, Manouchehri added that preliminary agreements entail conducting surveys in six months, after which the companies should submit master development proposals.

"The submitted proposals for each field will be scrutinized by separate technical teams and as soon as preliminary assessments are over, NIOC's Reservoir Management Committee will decide on the best proposals and negotiations to finalize the agreements will begin," he said.

20-Year Contract

According to the official, Danish conglomerate Maersk Group has proposed to develop the oil layer of South Pars in the Persian Gulf, which has already come on stream for producing 25,000 barrels of crude per day.

"Our talks to sign a 20-year contract have not come to fruition yet. Nonetheless, we are optimistic that a long-term deal can be secured by March 2018 to raise the field's output to as much as 120,000 barrels per day," he said.

"Due to the layer's complicated geological structure, qualified companies need to implement enhanced oil recovery techniques from the beginning of their operation, as the field’s heavy crude has an API of 22 degrees, while light oil’s API stands at 40."

Manouchehri noted that Maersk is a suitable candidate for the venture, as the company has advanced horizontal drilling technology.

Maersk produces oil from the Danish and UK sections of North Sea, Qatar, Algeria and Kazakhstan. It supports global oil and gas production by providing modern drilling services to oil companies across the world.

"Giants such as Maersk can provide us with quality drilling services," he said.

Maersk has already drilled over 300 wells and extracted more than 1 billion barrels of oil for Qatar from the Qatari section of South Pars, which is known as North Dome.