CNPC Likely to Undertake N. Azadegan Phase 2

CNPC Likely to Undertake  N. Azadegan Phase 2CNPC Likely to Undertake  N. Azadegan Phase 2

The second phase of North Azadegan Oilfield Development Plan will probably be handed over to the Chinese CNPC, director of the development plan of Azadegan Oilfield said.

"Based on a contract [signed previously by the two sides], CNPC must undertake the development of Azadegan Oilfield's Phase 2," Keramat Behbahani was quoted as saying by Mehr News Agency.

North Azadegan Oilfield is one of the fields shared by Iran with the neighboring Iraq, whose oil-in-place reserves are estimated at 5.6 billion barrels. Its development plan comprises two phases, each aimed at producing 75,000 barrels a day upon completion.

Earlier this month, Petroleum Engineering and Development Company's Managing Director Abdolreza Haji-Hosseinnejad told IRNA, "Based on contracts with the Chinese companies operating in North Azadegan and Yadavaran oilfields, we must first negotiate with the contractors. In case an agreement is not reached, other companies can enter into talks with Iran."

Currently, the Chinese contractors of Sinopec and CNPC operate in the first phases of Yadavaran and Azadegan oilfields, respectively.

China National Petroleum Corporation is a Chinese state-owned oil and gas corporation and the largest integrated energy company in China. CNPC is the parent company of PetroChina, the fourth largest company in the world in terms of revenue as of July 2014.

On investment opportunities in the Persian Gulf and West Karun oil and gas fields, Behbahani said features of development plans for fields such as Golshan, Changouleh, Ferdowsi, phases 2 and 3 of Kish Gas Field, South Azadegan Phase 2 and the third phase of Darkhovein Oilfield were presented to foreign investors and Iranian private companies in the IPC confab in Tehran.

Last month, Iran lined up 52 oil and natural gas projects worth an estimated $185 billion for 335 domestic and foreign companies, including Total, Lukoil, Rosneft, Eni, Sinopec, Statoil, Petrobras, Royal Dutch Shell and BP, a day after it unveiled its long-in-the-works framework for new oil and gas contracts, known as the Iran Petroleum Contract.

The North Azadegan project was eliminated from the list of available projects for foreign contractors in the conference.

Underscoring the attractiveness of the new oil and gas contracts compared to buyback treaties being in place for the past 20 years, the Azadegan Oilfield's director postponed evaluation of contracts to a time when they show results.

"In the long run, the contracts will demonstrate how effective they are in attracting investors to the oil and gas industry," he said.

The buyback contracts were unpopular with multinationals even before the introduction of tougher US and EU sanctions against Tehran in 2012. The model was largely criticized for its fixed scope of work, capital cost ceiling, remuneration fee and defined cost recovery period.

Under new contractual terms, more flexible conditions on oil price fluctuations and investment risks were offered to make the sector financially attractive.