Sinopec to Develop 2nd Phase of Yadavaran Oilfield

Sinopec to Develop 2nd Phase of Yadavaran OilfieldSinopec to Develop 2nd Phase of Yadavaran Oilfield

China Petroleum & Chemical Corporation (Sinopec) will retain its position as contractor of Iran's Yadavaran Oilfield, the field's director said on Monday.

"The master development plan for Yadavaran Oilfield has been drawn up and it was decided that Sinopec will develop the second phase of the field," Hadi Nazarpour told a press conference.

The remarks come after Oil Minister Bijan Namdar Zanganeh said in May that China will maintain its role in North Azadegan and Yadavaran oilfields under the same buyback agreements it had signed in the past to develop the two fields.

The arrangement was likely part of a memorandum of understanding that was signed between Iran and China in May to expand oil and gas collaboration.

Iran is currently drawing 100,000 barrels per day from the joint field with Iraq located 70 kilometers west of the city of Ahvaz in Khuzestan Province near the Iraqi border.

The western Arab neighbor started production from Yadavaran four months ago, according to Nazarpour who said a total of 53 million barrels of crude so far has been drawn from the field.

Iran has planned to raise production from Yadavaran in three phases. The present output is 15,000 bpd above the production target of the first phase.

The field's output is expected to reach 180,000 barrels per day in the second phase before exceeding 300,000 bpd in the third phase, Nazarpour said without giving a timeline.

New estimates revised the field's in-place crude reserves from 12 billion barrels to more than 31 billion barrels. Nazarpour said the prospect paves the way for introducing a fourth and a fifth development phase for the joint field.

Around 83,000 barrels of Yadavaran production is a blend of light crude and the rest is heavy crude.

  Not a Stellar Performance

Iran and Sinopec signed a contract in 2008 to develop the first phase of Yadavaran oilfield within three years. But the project faced a series of setbacks after tighter international financial and trade restrictions were imposed in 2011 and 2012 against Tehran over its nuclear program.

Many European companies were forced out of Iran and Chinese contractors replaced them in many areas. But the Chinese have a mixed record in Iran's oil and gas industry.

Zanganeh said in an earlier statement that Sinopec had made "considerable progress" in developing Yadavaran project. There have been occasions when the minister publicly warned the Chinese companies to comply with their contracts or get out of the way.

However, the state-run China National Petroleum Corporation (CNPC) was booted from the $2.5 billion South Azadegan project in 2014 after repeated delays in fulfilling its contractual obligations, although it has fared better in developing North Azadegan oilfield.

Awarding the Yadavaran field to Sinopec gives China an edge over European contractors who are set to compete for Iran's lucrative energy contracts

Iran lined up about 50 oil and projects last year, some of which are to be tendered within the next few months, but Yadavaran as well as North and South Azadegan projects are not part of the planned tenders.