3 Oil Projects Launched in Khuzestan Province
President Hassan Rouhani on Sunday launched three oil development projects near the border with Iraq in a visit to the southern oil-rich Khuzestan Province.
The symbolic gesture to mark the completion of the first development phases of Yadavaran, North Azadegan and North Yaran projects—three joint oilfields with Iraq in the West Karun region that are already in production—underscores Iran’s intention to play a bigger role in the global crude market.
“Raising oil production in West Karun to 600,000 barrels and 1 million barrels a day is feasible,” Rouhani said. “To do so, we need funding and technology.”
Iran had set a production target of 85,000 barrel-per-day for Yadavaran's first development phase, but output from the shared field beat the target to reach 115,000 bpd, the Oil Ministry's official news agency Shana reported.
The North Azadegan and North Yaran oilfields have met their respective output targets of 75,000 bpd and 30,000 barrels a day.
West Karun, Iran's top priority for raising crude production to restore market share it lost to the international sanctions, is located in Khuzestan Province and includes Mansouri, Yaran, Yadavaran as well as North and South Azadegan joint fields. The block holds an estimated 67 billion barrels of oil in place.
"Output from all oilfields in the West Karun region has exceeded 260,000 barrels per day," says Ali Kardor, the managing director of National Iranian Oil Company. The block's production will reach the 300,000-bpd mark in the present fiscal year that ends in March.
"Iran is now pumping crude oil from all oilfields in West Karun," including South Azadegan (40,000 bpd), North Azadegan (75,000 bpd), North Yaran (30,000 bpd) and Yadavaran (115,000 bpd), he added.
Kardor also said that raising the rate of recovery from West Karun oilfields by 1% would increase recoverable reserves by 670 million barrels, or some $33 billion in revenues with oil at $50 a barrel.
The fields have been developed in collaboration with Chinese companies under buyback contracts, including a $3 billion deal with Sinopec to develop Yaran oilfield and a $2.5 billion agreement with China National Petroleum Corporation for North Azadegan.
Persia Oil and Gas Industrial Development Co. (POGIDC), a subsidiary of the Iranian holding Setad Ejraiye Farmane Emam, has also developed the smaller-scale North Yaran project.
POGIDC last month signed a deal to develop three oilfields in Khuzestan, becoming the first Iranian corporation to sign an agreement under the framework of Iran Petroleum Contract, the country's new model of contracts that is expected to attract foreign investment and technology in the oil and gas sector.
Iran's key petroleum industry took a sharp hit after international sanctions were tightened in 2011 and 2012. Crude production plunged to just around 2.5 million barrels a day from 4 million bpd and major European companies left the Iranian market in fear of violating trade and financial restrictions in relation to doing business with Iran.
But Tehran is on track to recoup the market share it lost under sanctions following a historic deal with the world powers that came into force in January, based on which most international restrictions were eased in exchange for curbs on Iran's nuclear activities.
Iran, the No. 3 producer of the Organization of Petroleum Exporting Countries, has prioritized the development of joint oilfields with second-place Iraq which has almost doubled its crude output to 4.7 million barrels per day this year from 2.4 million bpd at the start of the decade.
According to Oil Minister Bijan Namdar Zanganeh, Iran needs $50 billion to develop the joint oil and gas fields.