InterOil Signs MoU to Build Oil Production Zone in Iran

InterOil Signs MoU to Build Oil Production Zone in IranInterOil Signs MoU to Build Oil Production Zone in Iran

InterOil Corporation, an independent oil and gas firm based in Papua New Guinea, has signed a memorandum of understanding with Pars Special Economic Energy Zone and Petropars Ltd. to develop a major oil production zone in southern Iran.

The agreement is aimed at determining the feasibility of establishing Pars 3, an expansive area of 16,000-hectares in Bushehr Province, which will incorporate all infrastructures for offshore and onshore crude exploration, production and export, Shana reported.

Mohammad Javad Shams, the chief executive of Petropars, said feasibility studies will conclude in eight months.

Pars 3 is planned to speed up crude production from Iran's shared oilfields in the Persian Gulf, including Esfandiar Oilfield off Kharg Island shared with Saudi Arabia.

Pointing to InterOil's large-scale port construction projects in Africa, Shams noted that the Papua New Guinea-based company reached out to Petropars to rekindle business following Tehran's landmark nuclear agreement with six world powers in July.

"If findings [of feasibility studies] are positive, we will move on to the investment phase with InterOil," Shams said.

"InterOil and Petropars used to work together to develop Phase 12 of South Pars [gas field]. That's why we have chosen Petropars as our technical partner in Pars 3 project."

InterOil's operations are largely focused in Papua New Guinea. The company is listed on the New York Stock Exchange and the Port Moresby Stock Exchange. It has a market capitalization of $2.8 billion.

  South Pars Clone

Pars 3 will produce crude oil like that of Iran's advanced facilities at South Pars, the world's largest gas field in the Persian Gulf shared by Iran and Qatar.

Iran, currently the third-largest producer of the Organization of Petroleum Exporting Countries, is pressing ahead with new oil projects as it aims to win back the market it lost to rival oil producers during the sanctions.

The country is expected to hold tenders for dozens of existing and new oil projects this year under a revised contractual framework that offer more attractive terms to international contractors for long-term investment and cooperation in Iran.

The Persian Gulf country is currently pumping between 3.5 million and 3.8 million barrels per day, according to various sources. It produced around 4 million bpd before international sanctions targeting its nuclear program were intensified in 2011 and 2012.

Oil Minister Bijan Namdar Zanganeh said at OPEC's last official meeting in Vienna this month that Iran wants a 14.5% share of OPEC's overall crude output in the long run. That translates into around 4.7 million barrels a day, considering OPEC's current production level.