Development of West Karun oilfields in the southern Khuzestan Province is Iran's top priority to raise crude production and regain its lost ground in the global oil market in the post-sanctions period, Oil Minister Bijan Namdar Zanganeh said on Thursday.
Zanganeh was speaking to reporters on the second day of his visit to Khuzestan Province, a day after he officially inaugurated three crude oil desalting plants.
"West Karun is undergoing a transformation. It is turning into an industrial zone with tens of production units and multibillion dollars in investment," Zanganeh was quoted as saying by ISNA.
Referring to West Karun's development as a "rebirth", he said the region's oil output will reach 1 million barrels a day upon the completion of all West Karun projects. An estimated $20 billion have been allocated for the project. The first development phase of West Karun is estimated to be completed in three years, in which crude production will rise by 600,000-700,000 bpd. The official also pointed to West Karun's immense potential for gas production and said massive joint hydrocarbon resources have turned it into a strategically important region for Iran.
"Drawing gas from West Karun (fields) will allow for building a major natural gas liquids (NGL) production plant at a cost of $700-800 million," he said. "This will create a lot of jobs."
West Karun, located in southwest Iran, includes Yaran and Mansouri fields as well as Yadavaran, North and South Azadegan joint fields with Iraq.
Raising Joint Fields' Output
Oil production at Yadavaran and North Azadegan oilfields in Khuzestan will rise by 30,000 bpd and 80,000 bpd respectively by March 2016, state-owned Petroleum Engineering and Development Company's Managing Director Abdolreza Haji-Hossein-Nejad said on the sidelines of the oil minister's visit to Khuzestan.
Plans call for raising crude production by 160,000 bpd from Phase 1 of Yadavaran Oilfield and by approximately 75,000 bpd from Phase 1 of North Azadegan field. In addition, crude output from North Yaran Oilfield is expected to rise by 30,000 bpd.
Yadavaran and Azadegan oilfields hold an estimated 50 billion barrels of crude combined, nearly one-third of Iran's total reserves and more than Libya's total oil reserves.
In 2007, Iran signed a $2 billion buyback contract with China's Sinopec to develop Phase 1 of Yadavaran field with a target of 85,000 bpd and 10,000 bpd of oil in the first and second phases of the project respectively. However, the Chinese failed to deliver on their promise to complete Phase 1 by 2013. According to oil officials, the Persian Gulf country needs $50 billion to carry out its development projects in shared oil and gas fields.
Iran aims to close in on its Persian Gulf neighbors in terms of extraction from joint oil and gas fields. It has 26 joint oil and gas fields with neighboring countries, but a lack of modern technology and budget has hampered development of fields, allowing neighbors to draw the lion's share of underground reserves.
Impact of Sanctions
The cost of oil projects skyrocketed during the sanctions, many of which were carried out by PEDEC, but "costs will be significantly slashed and operational standards will rise in the post-sanctions period."
The sanctions cut off Iran from the international financial system and hampered trade and exports, but Zanganeh stressed the US-engineered embargoes were mainly designed to cripple the Islamic Republic's oil industry, its main source of revenues over the past three decades.
"Crude exports were reduced by 1 million bpd due to the sanctions," Zanganeh said. However, Iran is planning to raise output by more than the estimated 500,000 barrels a day once the sanctions are lifted.
Oil Ministry official have declared that the Islamic Republic can reach the 500,000-bpd milestone by late November or early December even before most western sanctions are lifted. However, Bloomberg cited an energy analyst as saying on Wednesday that Iran’s crude exports are likely to remain restricted until the first half of next year.
The minister also described the post-sanctions era as an opportunity to modernize the country's aging and largely dilapidated oil installations.
Iran and six world powers reached a landmark agreement on July 14 on curbing Tehran's nuclear program in exchange for an end to oil and trade embargoes.
