NIDC Seeking $200m for New Drilling Rigs

NIDC Seeking $200m  for New Drilling RigsNIDC Seeking $200m  for New Drilling Rigs

National Iranian Drilling Company is in negotiations with domestic and international firms to raise $200 million in investment to expand its fleet of rigs, executive director of NIDC said.

"We want to buy new offshore drilling rigs via Iranian or foreign investment under joint ventures or lease-to-own contracts," Heidar Bahmani was quoted as saying by Shana on Sunday.

Bahmani added that NIDC is planning to add five new drilling rigs in the next Iranian year (starting March 20) to raise its rig fleet to 80, adding that it only had 6 rigs in 1979—the year in which Iran's Islamic Revolution gained victory.

"Investment is imperative in drilling operations" because more than 60% of all investments in upstream oil and gas sector, i.e. exploration and production, go to drilling, he said.

NIDC has held extensive talks with a number of foreign and domestic contractors to provide new rigs, following Iran's landmark nuclear agreement with world powers in July.

Bahmani said Iranian firms, particularly the private sector, have the edge in negotiations. "We do all we can not to hamper the private sector's development. NIDC will look elsewhere if and when the private sector cannot deliver," he said.

Iran has held exclusive tenders for Iranian companies to promote the domestic drilling industry and reduce the outflow of money toward foreign contractors.

According to reports, Iranian Offshore Oil Company has recently signed a deal to lease a drilling rig owned by the North Drilling Company to develop Salman Oilfield that is shared with the UAE in the Persian Gulf.

The rig would be the second to go on stream over the past few months, with a third leasing contract expected to be sealed in the near future.

  Talks With Foreigners

The Persian Gulf country cannot afford to put all its eggs in the basket of Iranian contractors just yet.

International sanctions against Iran's nuclear program put the development of the oil industry on a backburner. Trade and financial embargos cut off Iran from the global banking system and rigorously restricted the country's trade with the outside world.

Sanctions also cut crude output to an average of 2.5 million barrels a day from nearly 4 million barrels seen in 2010, divesting Iran of a vital source of revenue to develop its oil industry, the pillar of its largely one-dimensional economy over the past four decades.

But the Jan. 16 removal of sanctions has helped Iran cut down on costs and discuss drilling projects with overseas enterprises with more freedom.

The country reportedly spent $160,000 a day to lease foreign drilling rigs under the sanctions regime, but costs have halved since sanctions were lifted.

Bahmani said the NIDC has held talks with Chinese, Russian and some other European contractors to add new rigs.

NIDC, a subsidiary of the state-run National Iranian Oil Company, also plans to carry out joint projects outside Iran.

"We want to expand our reach in Persian Gulf countries and Iraq's market," Bahmani said. "The Chinese have won a tender [to drill Iraqi oilfields] … and we want to be part of that."

The official did not give more details of the prospective cooperation, but the Chinese contractor is likely to be Honghua Group that entered into an agreement worth $26 million with an Iraqi firm to provide oilfield drilling services in the war-torn country.

NIDC is also eying drilling projects in Kuwait. The small Arab country is the seventh-largest producer of the Organization of Petroleum Exporting Countries, but third-place Iran is planning to help expand crude production capacity of the Persian Gulf neighbor that pumps around 2.5 million barrels a day.