Plan to Draw 30,000 bpd From Azar Oilfield

Plan to Draw 30,000 bpd From Azar OilfieldPlan to Draw 30,000 bpd From Azar Oilfield

Oil production from Azar Oilfield in the west of Iran will start at 30,000 barrels per day in the current Iranian year that ends March 2017, director of the field's development plan said on Tuesday. “The field's development project, which has registered a work-in-progress rate of 78%, will be completed by the yearend after a prolonged delay,” Keyvan Yar-Ahmadi was quoted as saying by Shana.

Azar Oilfield, located in Anaran block near the border with Iraq in the town of Mehran in Ilam Province, holds 2.5 billion barrels of oil in place and is expected to produce up to 65,000 bpd once fully developed. It is one of the six joint fields with Iraq, along with Dehloran, West Paydar, Naft-Shahr, Azadegan and Yadavaran.

However, Iran has yet to extract crude oil from the shared field after more than 12 years of planning and development.

Yar-Ahmadi added that Russia’s oil company Lukoil started working on the Anaran block in 2003 but pulled out after international sanctions had been imposed against Iran. Norway's renewable energy company Norsk Hydro ASA, Malaysia's Petronas and Russia's Gazprom were among the other enterprises that did not succeed in developing the project because of international restrictions.

"It was not until 2011 when the National Iranian Oil Company signed a contract with Oil Pension Fund Investment Company, a subsidiary of the Oil Ministry, based on which the latter was commissioned to produce as many as 30,000 bpd from the field in three years. Nonetheless, due to the complex geological structure of the field, the venture has not become operational yet.  

According to the official, $800 million have been allocated from the National Development Fund of Iran to start production at Azar Oilfield. Moreover, another $800 million are needed for the project to go on stream despite the current funding. NDFI, a sovereign wealth fund, was founded in 2011 based on a parliamentary bill to transform oil and gas revenues to productive investment for future generations.

Underscoring the fact that domestic contractors and local workforce are not as competent as foreign counterparts, especially in terms of upstream oil industry, he noted that plans have been made to raise output by 30,000 bpd by the yearend, yet the final plan is to extract 65,000 bpd in two years.

"The field is considered as drillers' nightmare given the sequence of its low- and high-pressure layers, and the large number of tubes for drilling and lining of wells," Yar-Ahmadi said.

"Hydraulic fracturing is another challenge in the field, which has been addressed by acid fracturing, a popular method for improved oil recovery."

According to Abdolreza Haji-Hosseinnejad, the chief executive of Petroleum Engineering and Development Company, Iran is planning to raise production from five oilfields it shares with the western neighbor in the current Iranian year that ends in March 2017.

"The rise in production capacity from North Azadegan, South Azadegan, Yadavaran and North Yaran, all joint fields with Iraq, will take place by the end of the year," he said.

Iran is recovering from years of sanctions that undermined its economy and trade with the world. The international restrictions were eased in January allowing Tehran to raise crude output and decide whom to sell.