Austria's OMV Eyes Khuzestan Oilfield

Austria's integrated oil and gas company OMV is willing to invest in Iran's oil industry, Erwin Kroell, OMV's senior vice president for Middle East and Africa said.

“It is our top priority to develop Band-e-Karkheh Oilfield once our technical studies on the field's deposits are concluded,” Erwin Kroell was quoted as saying by Shana, the Oil Ministry's official news agency.

Referring to the memorandum of understanding signed between OMV and the National Iranian Oil Company in May to study Band-e-Karkheh field in the southern Khuzestan Province, the official said negotiations are underway to develop the field.

"The first phase of the development plan is aimed at extracting 7,000 barrels of oil per day from Band-e-Karkheh, which is located 30 kilometers northwest of Ahvaz," he said.

According to Kroell, the Vienna-based company signed an agreement with the Oil Industry Research Institute of Iran in April to launch a joint venture to study Iran's hydrocarbon reserves in and around the Persian Gulf and the salt domes in the Zagros Mountain range.

Salt domes are massive underground salt deposits that often trap oil or natural gas in their tops, known as cap rock, serving as hydrocarbon reservoirs.

Asked about the prospect of other energy projects, he noted that Iran and Austria can also cooperate in energy efficiency plans.

"OMV has been involved in such projects not only in Austria but also across Europe and it is willing to transfer its know-how to Iran," he said.

OMV opened an office in the Iranian capital in 2001 after signing a deal to conduct studies on the Mehr oil exploration block in the oil province of Khuzestan.

The Austrian company, which is 31.5% state-owned, is one of that country's largest listed industrial companies with a workforce of around 25,500. It operates a major domestic gas pipeline network as well as gas storage facilities in Austria and Germany.

OMV says it is placing bets on opportunities in Iran, as it retools its upstream portfolio for growth in the struggling energy sector. According to Rainer Seele, OMV's chief executive, major investment opportunities exist in the Iranian energy sector, but Tehran needs to offer better incentives to attract foreign energy companies.

"Embarking on oil and gas projects demands a strong and competitive fiscal and legal regime to attract foreign direct investment and state-of-the-art knowhow," he said.

According to Kroell, OMV is one of the several dozen European energy companies that is keen to learn about the terms and conditions of Iran Petroleum Contract (IPC), the new model of contracts designed to ease foreign investment and partnership in Tehran's oil and gas development projects.