Petronas Eyes Oilfield Agreement

Petronas Eyes Oilfield AgreementPetronas Eyes Oilfield Agreement

The National Iranian Oil Company is expected to sign a memorandum of understanding with Malaysia's Petroliam Nasional Berhad, known as Petronas, in Tehran on Wednesday to study the Azadegan Oilfield, one of Iran's most-prized oil projects to be tendered in 2017.

According to Mehr News Agency, a separate MoU will be signed with Petronas to conduct studies to enhance oil recovery rate in Cheshmeh Khosh Oilfield, 80 kilometers east of Dehloran County in Ilam Province near the border with Iraq.

Russia's Gazprom Neft PJSC and Austrian oil and gas company OMV have already signed preliminary agreements with NIOC to conduct surveys on implementing oil recovery methods in Cheshmeh Khosh field.

Major foreign oil and gas companies including Total S.A., Anglo-Dutch multinational oil and gas company Royal Dutch Shell and Japan's INPEX have signed agreements to study Azadegan's development potential.

The oil and gas majors are expected to present their findings to the NIOC prior to an international tender for the Azadegan project in early 2017.

Azadegan Oilfield in the southern oil-rich province of Khuzestan is one of Iran's largest oilfields that it shares with Iraq. The field, which is divided into the north and south sections, holds an estimated 33 billion barrels of in-place oil.

It was discovered two decades ago but has since experienced underwhelming development by foreign contractors.

Iranian officials have said that the coveted oil project could be developed by a consortium of British, Japanese and French companies with an Iranian partner.

  Converging Interests

Tehran and Kuala Lumpur have converging interests in boosting ties in Iran's petroleum sector, according to Oil Minister Bijan Namdar Zanganeh.

"Petronas' footprint in Iran dates back to nearly two decades ago as a contractor of South Pars, Iran's mega gas project in the Persian Gulf," Zanganeh said, noting that should small and medium-sized Malaysian companies invest in Iran's upstream projects, they will be remunerated from the output of the oil/gas fields they develop.

Zanganeh believes that taking slow but steady steps, such as short-term oil and byproducts export contracts, could ease cooperation in multibillion dollar projects.

Iran shipped between 50,000 and 60,000 bpd of crude oil to Southeast Asia's third-largest economy before sanctions.

Data provided by Malaysia's Finance Ministry show that in 2005, the country produced 60,000 barrels per day of crude and between January and November 2014 it was down to 48,000 bpd, prompting Kuala Lumpur to diversify petroleum supplies to meet domestic energy demand.

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