Shortening oil well drilling time can compensate for the drastic decline in oil prices to some extent, managing director of the National Iranian Drilling Company said on Saturday.
“The expense of maintaining an offshore oil rig in good working condition amounts to $300,000 per day,” Heidar Bahmani added.
Bahmani noted that oil and gas reservoir discovery should be made with a high degree of certainty, otherwise the company will have to shoulder the extra financial burdens, ILNA reported. Pointing to the massive cost of offshore drilling operations, the official said plans have been devised to accelerate drilling speed, as it will considerably reduce expenses.
“Shortening the drilling time, precision and safety top NIDC's priorities,” he said.
Bahmani added that accelerated drilling plans are indicative of the concerted efforts of NIDC's staff in addition to their role in reducing costs and generating value-added much needed by the country's oil industry.
Commenting on NIDC's strategies to have an active presence in the Caspian Sea, Bahmani added, "Because of being too busy working on onshore projects as well as in the Persian Gulf, we did not have an opportunity to invest or play an active role in the Caspian Sea."
He noted that some thought they would be able to make a load of profit simply by buying a rig. They seemed to be oblivious of the fact that embarking on such a venture requires cutting-edge expertise and years of experience.
According to the official, technology-wise, the drilling industry has witnessed drastic changes in recent years, which explain NIDC's plan to take advantage of state-of-the-art technologies to perform drilling operations as fast as possible with the aim of curbing costs.
Bahmani believes that sanctions caused NIDC to lag behind major oil drillers' in the world, which can only be compensated by attracting billions in foreign investment.
He, however, noted that sanctions turned out to be a blessing in disguise, as they helped Iran indigenize some equipment and services, in addition to gaining valuable experience in shortening the drilling time.
"NIDC is in negotiations with domestic and international firms to attract $200 million in investment to expand its fleet of rigs. We want to buy new offshore drilling rigs through Iranian or foreign investment under joint ventures or lease-to-own contracts. 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.
Indigenized Equipment
According to Jafar Tahmasebi, the head of NIDC's Technology and Engineering Department, the company has indigenized 310 strategic drilling equipment in collaboration with domestic manufacturers and technicians.
"More than 18,000 drilling equipment have been indigenized in NIDC's Technology and Engineering Department since 1997," he said.
On gaining access to advanced drilling know-how, Bahmani said the employment of rotary steerable systems, a form of drilling technology used in directional drilling, will not only accelerate drilling speed but also increase efficiency and reduce expenses.
Referring to pre-sanctions conditions when NIDC had to rely on low quality Chinese drilling equipment, he said the economic climate has changed in Iran and producers cannot capture the market unless they manufacture quality equipment and machinery at competitive prices.
The company's chief executive believes that manufacturing good quality oil equipment compatible with international standards must continue in line with Resistance Economy, a concept proposed by the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei to counter the sanctions, promote domestic growth and reduce consumption.
Curbing Expenditures
Iran also plans to curb lavish spending in its resurgent oil industry by cutting down on the hefty cost of leasing foreign drilling rigs.
"The country spent $160,000 a day to lease foreign drilling rigs under the sanctions regime, but costs have halved after some sanctions against the country were lifted," Rokneddin Javadi, a deputy oil minister, was quoted as saying.
According to Javadi, Iran spends about $25 billion every year to develop its oil industry, but he said measures should be taken to put a cap on costs.
"This money ($25 billion) is a lot for a year. It is more than the whole budget of some countries," Javadi said. "This cost saving can be implemented across the oil industry."
Javadi noted that at least $2.5 billion can be saved in annual costs, if efficiency in upstream sector, i.e. exploration and production, improves by 10%.
