Iran-China Oilfield Talks Underway

Iran-China Oilfield Talks UnderwayIran-China Oilfield Talks Underway

Although oil officials had announced China Petroleum & Chemical Corporation (Sinopec) would retain its position as contractor to develop two joint oilfields of Yadavaran and North Azadegan in Khuzestan Province, the newly-elected managing director of National Iranian Oil Company said talks are still underway and no contracts have been signed yet.

“Sinopec's development proposals are still under consideration and nothing has been concluded yet,” Ali Kardor was also quoted as saying by IRNA.

Underscoring the fact that Chinese companies top NIOC's priority list to complete the second phase of the venture, the official said, “All proposals have been submitted, but they have not yet been approved.”

Stressing that Yadavaran and North Azadegan are among the most profitable oilfields in Iran, Kardor noted that based on the terms of the agreement, as long as the Chinese have new proposals to undertake the project, NIOC will not enter into negotiations with other enterprises despite the fact that some international giants have shown interest in developing the oilfields.

According to the official, cooperation with CNPC in developing the second phase of North Azadegan Oilfield will be resumed if the Chinese company agrees to recruit first class contractors. He stressed that Iranian technical consultants should play a role in the designing process.

  Once a Major Player

Kardor noted that NIOC is still in talks with Sinopec on implementing the second phase of Yadavarn oilfield because the Chinese firm played a major role in developing the first phase.

Sinopec, which abandoned the development of Yadavaran Oilfield when the West tightened sanctions against Iran, resumed talks on developing the second phase following Tehran's nuclear agreement with the six world powers (the five permanent members of the United Nations Security Council plus Germany) in July 2015.

“NIOC contracts will not be restricted to the new Iran Petroleum Contracts, as other contractual models, namely buyback, EPC (engineering, procurement, construction) and EPCF (engineering, procurement, construction, finance), are also on the table,” Kardor said without defining the type of contract NIOC intends to conclude with the Chinese.

Iran's Oil Minister Bijan Namdar Zanganeh said in May Chinese firms will maintain their role in the second development phase of North Azadegan and Yadavaran oilfields based on their initial contracts to develop the two fields in the first phase.

Reportedly, several oil projects will be put to tender in the near future.

“For raising production in the developed oilfields, transfer of technology is a priority, but for untapped fields investment is the main factor,” Kardor said.

  Plans to Raise Output

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

Iran has planned to raise production from Yadavaran in three phases. The present output, of 100,000 bpd is 15,000 bpd above the production target of the first phase.

"The field's output is expected to reach 180,000 bpd in the second phase before exceeding 300,000 bpd in the third phase," Kardor 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.

Kardor said the prospect paves the way for introducing a fourth and fifth development phases for the joint field.

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

North Azadegan Oilfield is another field shared by Iran with neighboring Iraq, whose oil-in-place reserves are estimated at 5.6 billion barrels. Its development plan comprises two phases, each aimed at producing 75,000 bpd upon completion.