Austria’s OMV Keen on Oilfield Development

Austria’s OMV Keen on Oilfield DevelopmentAustria’s OMV Keen on Oilfield Development

Austrian oil and gas company OMV has expressed readiness to reestablish its status in Iran’s energy sector, with the development of Band-e-Karkheh Oilfield in western Iran to rekindle cooperation with the Persian Gulf country in the post-sanctions era.

“A memorandum of understanding was signed between the National Iranian Oil Company and OMV to develop Band-e-Karkheh Oilfield,” Abdolreza Haji-Hosseinnejad, managing director of Petroleum Engineering and Development Company, told Mehr News Agency on Wednesday.

According to the official, the first phase of the development plan is aimed at extracting 7,000 barrels of oil per day from the oilfield, which is located 30 kilometers to the northwest of Ahvaz, with a length of 50 kilometers.

Stressing that Band-e-Karkheh is not among West Karoun Oilfields, Haji-Hosseinnejad said plans have been made to develop the field and preliminary agreements have been reached with the Austrian energy company, which is planning to expand operations of its Tehran office.

"OMV has already offered a proposal to play an active role in developing the second phase of Cheshmeh Khosh Oilfield, 80 kilometers east of Dehloran in Ilam Province," he said, noting that technical, financial and contractual negotiations have not come to fruition yet.

Extraction from Cheshmeh Khosh is now underway, according to oil officials, but OMV’s contribution to the project can help accelerate extraction from the oilfield.

"OMV opened an office in the Iranian capital in 2001 after signing a deal not only to conduct studies on the Mehr oil exploration block in Khuzestan Province, but also to play a major role in Iran's LNG initiative and the South Pars Phase 12 development plan," Stefan Hanke, an official at the OMV said, highlighting the deals as successful bilateral cooperation between 2002 and 2007.

“We were forced to leave Iran in 2008 due to western sanctions against the Islamic Republic,” he said, stressing that OMV never completely shut its office in the Persian Gulf country and maintained research collaborations with NIOC.

Last September, during three days of extensive talks between Iranian and Austrian officials in the capital, Oil Minister Bijan Namdar Zanganeh met with Rainer Seele, CEO of OMV, on utilizing Austrian technology to boost extraction from Iran’s rich oil and gas fields.

OMV, which is 31.5% state-owned, is one of Austria’s largest listed industrial companies with a workforce of around 25,500 employees. It operates a major domestic gas pipeline network and gas storage facilities in Austria and Germany.

The company officials announced last year that improved technologies and attractive investment opportunities were necessary for a full embrace of Iran.

Iran, Russia and the UAE are part of an investment plan that Seele said places profitability over production growth.

The Austrian energy company says it is placing bets on opportunities in Iran, as it retools its upstream portfolio for growth in the weakened energy sector.

Seele believes an investment opportunity exists in the Iranian energy sector, but there are a series of hurdles, which explains why Iran needs to offer better incentives to lure foreign energy companies forced by low oil prices to slash investments.

"Embarking on oil and gas initiative requires a competitive fiscal and legal regime to attract foreign direct investment and state-of-the-art knowhow," he said.