The National Iranian Oil Company concluded an agreement with the Tehran-based Dana Energy Company on Sunday to develop the onshore Sohrab Oilfield near the Iran-Iraq border in the southern Khuzestan Province.
The $850 million contract aims to extract 160 million barrels of crude from the field over the next 20 years. The field’s current production, which stands at zero, is expected to reach 30,000 barrels per day by 2025, IRNA reported.
Given the price of each barrel of crude at $50 on average over the period, the value of extracted crude from the hydrocarbon reserve is estimated to be around $8 billion.
The deal is in line with government plans to boost oil output from joint hydrocarbon deposits. Iran owns 145 oil and gas fields, of which 26 are shared with neighbors, including Kuwait, Iraq, Qatar, Bahrain, the UAE, Saudi Arabia and Turkmenistan.
Elaborating on the deal, Mohsen Khojastemehr, managing director of NIOC, said the project includes drilling 20 wells, installing 14 electrical submersible pumps on production wells, constructing and upgrading ground facilities, implementing enhanced oil recovery methods and laying oil and gas pipelines.
Work also entails the construction of a central treatment and export plant, a fire-fighting facility, a permanent camp and warehouses.
The oilfield was supposed to be developed by Wintershall, Germany's largest oil and gas producer, in 2018, but it terminated the contract after the US administration imposed sanctions on Iran in the same year.
The field is located 115 kilometers northwest of the city of Ahvaz in Hoor al-Azim Wetland.
Dana Energy Company had earlier signed a memorandum of understanding with NIOC to study joint oilfields in Khuzestan Province, including Sohrab, Sepehr and Jofeyr, in 2017.
Dana Energy is a private oil and gas company active in exploration and production, upstream services and energy trading. It was among the first group of domestic companies certified in 2017 for cooperation in oil and gas projects alongside foreign contractors.
NIOC’s subsidiaries, including the National Iranian South Oil Company and Iran Central Oil Fields Company, have signed several contracts with domestic oil and gas companies to develop eight oilfields over the last two years.
Ongoing Projects
According to the Oil Ministry’s news agency, 33 projects worth $1.7 billion are being undertaken to enhance oil output by 185,000 barrels a day within three years.
Giving a breakdown, NIOC has announced that 29 projects are onshore and the rest offshore.
The projects have created jobs in the southern and western regions, namely Khuzestan, Bushehr, Hormozgan and Kohgilouyeh-Boyerahmad.
NIOC will fund the projects to the tune of 80%, including through bond issuance, and contractors will put up 20%.
After the fields produce for a year and a half, operators would have to use their own funds to cover costs.
Some domestic firms which are implementing the projects are Global Petro Tech Kish Company, Persia Oil and Gas Industry Development Company, Petroiran Development Company, Pasargad Energy Development Company, North Drilling Company and Iranian Offshore Engineering and Construction Company.
Oilfields that are being developed include Siah-Makan and Chelingar in Gachsaran, Kohgilouyeh-Boyerahmad Province, Balaroud, Maroun, Mansourabad and Ramin in Khuzestan, Resalat in Hormozgan and Forouzan in Bushehr Province.
