Energy, Economy

Iran, Iraq Set to Jointly Develop Shared Oilfields

Iran, Iraq Set to Jointly Develop Shared Oilfields
Iran, Iraq Set to Jointly Develop Shared Oilfields

Iran and Iraq have reached an agreement to jointly develop two shared oilfields in the southern Khuzestan Province, according to a deputy at the National Iranian Oil Company.

"We are collaborating with Iraq is some [joint] fields. An agreement has been made to integrate the development of two small oilfields in the city of Khorramshahr," Gholamreza Manouchehri, deputy for development and engineering at the NIOC, was quoted as saying by ISNA on Tuesday.

He did not disclose the name of the fields or the framework of the agreement. But the remarks echo a statement by Iraqi Oil Minister Jabar al-Luaibi in September that Baghdad would soon sign a deal with Tehran to jointly invest in two oilfields.

Integrated development of oil and gas deposits shared by two or more countries is an increasingly common practice that helps to cut back production costs and maximize output and profit.

Iran shares a spate of oil and gas reservoirs with neighboring countries, including several oil deposits with Iraq that shares over 1,400 kilometers of border with Iran to the west.

Iran also draws over 500 million cubic meters of gas per day from South Pars, a giant offshore gas deposit in the Persian Gulf that is shared with Qatar and contains ultra-light crude oil in deeper layers.

With a daily output of around 3.8 million barrels, Iran is the third-largest OPEC producer after Iraq that currently pumps close to 4.5 million barrels per day.

Holding the fourth-largest crude and second biggest gas reserves in the world, Iran has assigned a high priority to develop its shared reservoirs.

Iran hopes to sign a contract to develop its giant Azadegan Oilfield, a giant deposit of 33 billion barrels of crude that lies near the Iraq's Majnoon Oilfield in Basra.

Manouchehri said efforts are underway to launch a tender for Azadegan, which was singled out as the first development project to be tendered since Tehran lifted the veil on its new model of contracts, known as IPC, in late 2015.

Azadegan is located in the West Karoun oil block that holds around 67 billion barrels of crude.

South Pars Deal

Manouchehri said a deal with French energy company Total to develop an offshore phase of South Pars is underway, but the deal requires further considerations.

"Total has not backed out of the deal, but the NIOC has decided to look more carefully at the details of the agreement because Total is also present on the other side of the field", Manouchehri said.

Total signed a $5-billion deal in July last year to develop Phase 11 of South Pars in Collaboration with China's CNPC and Iran's state-owned Petropars.

Complicating Total's presence in Iran is the partnership of the French company with Qatar Petroleum in Al-Shaheen, the oil layer of South Pars/North Dome whereof Iran began extracting crude just a year ago.

"Negotiations on the oil layer [of South Pars] have made good progress, but there are some ambiguities because of Total's ownership" in the oil layer of the joint field, the official said.

Add new comment

Read our comment policy before posting your viewpoints