Russian investors and companies have finalized a contract with Iran worth $4.5 billion for the development of seven oil and gas fields in Iran and some of the projects have registered 7 to 35% physical progress so far, the Oil Minister said.
Javad Owji, who was in Moscow to attend the 16th Iran-Russia Joint Economic Commission held November 1, also said that a downhole pump manufacturing plant would be built jointly by Russian and Iranian companies in the southwestern city of Ahvaz, the Oil Ministry’s news portal Shana reported him as saying.
Considered one of the outstanding projects developed by the two countries, “the plant will manufacture 150 downhole pumps every year. With their special technology, these pumps can increase the production of oil wells by two to three times,” he added.
Referring to the possible sanctions on Russia in January by the United States and the European Union, the minister said: “Iran has been facing such sanctions for years, so it is a good opportunity for the two countries to work together and neutralize the international sanctions”.
A memorandum of understanding was signed in July with Russia’s oil and gas giant Gazprom to develop two gas fields and five oilfields shared with Arab neighbors with $40 billion of investment.
The long-term plan will help raise crude output from the current 2.5 million barrels a day to 5.7 million bpd in 2030. Moreover, natural gas production is supposed to increase by 500 million cubic meters to reach 1.5 billion cubic meters in eight years.
Of the total investment ($40 billion), $10 billion will be allocated to the expansion of the North Pars field, located 120 kilometers southeast of the southern Bushehr Province, and the development of Kish Gas Field, the second largest field in the Persian Gulf after South Pars located 30 km east of Lavan Island.
North Pars is one of the biggest independent gas fields of the country. 17 wells have so far been drilled and 26 offshore platforms have been installed there.
North Pars has the capacity to produce 100 million cubic meters of gas per day. Such a recovery would require the drilling of 46 wells.
Its gas is planned to be used at processing plants for the annual production of 20 million tons of liquefied natural gas.
The Kish Gas Field's development plan includes three phases. In the first phase, 14 wells have been drilled but production has not begun.
A 200-km pipeline is planned to be laid to connect the field to refineries in South Pars Gas Field and Fajr Jam Gas Refinery in Bushehr.
Iran (34 trillion cubic meters) and Russia (32.6 tcm) hold the largest proven gas reserves in the world, according to the BP Statistical Review of World Energy.
Gazprom will also invest $10 billion to develop oil fields which include onshore Karanj, Abteymour and Mansouri fields in Khuzestan Province in addition to Azar and Changouleh fields near the Iraqi border in Ilam Province.
Iran is sitting on an estimated 836 billion barrels of oil and condensates in place, of which 239 billion barrels are recoverable.
Increasing Wells Pressure
Moreover, the Russian giant will invest $15 billion to increase pressure in gas wells in 24 phases of South Pars Gas Field.
Iran needs to make up for pressure reduction in its gas fields and prevent a decline in gas output.
Estimates show that pressure reduction in the South Pars Gas Field, which Iran shares with Qatar, will start from 2025 and reduce gas production to as low as 400 mcm in 2032, down 100% compared to the present levels.
To address the issue, new wells are expected to be drilled in the field. However, installation of offshore compressor stations in the field is the only long-term viable option to control pressure reduction.
Almost 350 wells in the SP are acidized and perforated regularly to keep output as high as possible, but this cannot continue for long and drilling new wells is inevitable.
Output from the giant field is now 780 mcm/d and will reach 1.2 bcm per day by 2024 and then a downtrend would begin. Production is expected to fall by 28 mcm/d, which is 10 bcm per year, as of 2025.
South Pars meets 80% of Iran’s gas demand and the decline in output will create insurmountable problems for households, industries and thermal power stations.
Gazprom will invest an additional $5 billion on liquefied natural gas projects in Iran as well.
Drawing on the experience of Russian oil and gas giants is crucial to transform Iran into a major player in the global gas market. Using the expertise of Russian gas giant Gazprom will enable Iran to access advanced technology for extracting gas from deep geological repositories to produce and export liquefied natural gas.
Supplying gas to Europe and even to neighboring states [like Pakistan] via pipeline is not viable due to political instability and clash of interests.
LNG accounts for 31% of the global gas trade, of which 70% are carried out in Asia and the Middle East. There are currently 60 LNG terminals in Asia, with 40 others in the pipeline.
The LNG industry paves the way for entering new markets, access to which is not feasible through pipelines.
