NIOC Inclined Toward Maersk for South Pars Oil Development

Negotiations are underway with Danish conglomerate Maersk Group to undertake the second phase of the South Pars Gas Field's oil layer development project, said the deputy head of National Iranian Oil Company.

“Due to the layer's complicated geological structure, advanced horizontal drilling technology is required to tap into the resources, which necessitates cooperation with Maersk,” Gholamreza Manouchehri was quoted as saying by Mehr News Agency on Wednesday.

According to the official, qualified companies need to employ enhanced oil recovery techniques from the beginning of their operation as the field’s (heavy) crude has an API of 22 degrees, while light oil’s API stands at 40.

Maersk has activities in a variety of business sectors, primarily transportation and energy.

"Extraction of 35,000 barrels per day from the joint field with Qatar is high on the agenda," the official said, noting that the second development phase of South Pars oil layer is a top priority for NIOC which will be carried out based on Iran's new model of oil and gas contracts. Commenting on prolonged talks with Maersk, Manouchehri said no agreement has been signed yet. Nonetheless, the Danish conglomerate is "a top candidate as it can provide us with quality drilling services."

Recalling that Iran is lagging behind Qatar in terms of extraction from the South Pars in the Persian Gulf, he noted that the small Arab neighbor, which started extracting oil from the field in 1991, has already drilled more than 300 wells with the help of international oil giants. It has reportedly extracted more than 1 billion barrels of crude from the joint field during the last 25 years.

"Plans are in place to increase Iran's output from the layer to 200,000 bpd in 20 years by drilling 300 wells."

Regarding Iran's purchase of a $300-million floating production storage and offloading (FPSO) vessel, Manouchehri said that the FPSO was built in Singapore and will be placed in a specific location in the South Pars oil layer by January.

It is expected that connecting the wells to the vessel via pipelines would take two months and as soon as the piping operation is completed the extraction process will begin.

Bijan Namdar Zanganeh, the oil minister, expressed optimism this week about tapping into the South Pars oil layers after years of development.

"We will extract crude from the South Pars' oil layer by March 2017 and further increase output (from the oil layer) under the new model of contracts," Zanganeh said, referring to Iran's new contractual framework for oil and gas projects, dubbed as Iran Petroleum Contract. The SP oil layer is located 130 kilometers off Iran's coast in the Persian Gulf with an estimated 7 billion barrels of oil in place. Iran expects to start production with 20,000-35,000 barrels a day.

Maersk produces oil from the Danish and UK sections of the North Sea, Qatar, Algeria and Kazakhstan. It supports global oil and gas production by providing modern drilling services to oil companies around the world.