Japan’s Inpex Touted for Iran's Azadegan Oil Project

Japan’s Inpex Corporation has opened negotiations with the National Iranian Oil Company to develop Azadegan Oilfield in southwestern Iran, the chief executive of Iran's Petroleum Engineering and Development Company (PEDEC) said.

"Inpex signed a memorandum of understanding to study the oilfield last June. Its six-month period to study the oilfield is over and a development proposal (from the company) is expected soon," Noureddin Shahnazizadeh said, casting the Japanese oil major as a strong candidate to secure the field's development rights, IRNA reported.

Inpex, which previously held a stake in the project but pulled out in 2010 amid international sanctions on Iran, was the first foreign company to sign an MoU last year for the oilfield, one of Iran's most-prized oil projects to be tendered in 2017.

However, it has four major rivals namely Total S.A., Royal Dutch Shell PLC, Petroliam Nasional Bhd (Petronas) and China National Petroleum Corporation, all of which have completed technical surveys and are sending proposals.

The Azadegan field, 80 kilometers west of Ahvaz near the Iraqi border, contains 6 to 7 billion barrels of recoverable crude oil reserves, but its geologic complexity makes extraction difficult. The field is divided into two parts: North and South Azadegan.

“A leading player in the oil industry, Inpex has experience and data regarding Azadegan. That's why it is one step ahead of rivals (in Azadegan project) and has a good chance to win the tender,” Shahnazizadeh said, noting that in 2010, the company, which had a 75% stake in a development project in Azadegan, was forced to withdraw amid the tighter international sanctions.

“There is no conflict between Iran and Japan over Azadegan,” Shahnazizadeh said, adding that Inpex was forced to leave the project, and now they are welcome again.

According to Shahnazizadeh, Total has already presented a final proposal for the project while Inpex and CNPC will submit their proposals soon. The field is expected to be tendered in the first quarter of this year and the contractor will be awarded a contract probably in summer.

--- Worth $25 Billion

"Technical, financial and recovery factors will determine the winner," Shahnazizadeh said.

The West Karun shared oilfields, which includes the Azadegan and Yadavaran Oilfields, has a contract value of some $25 billion, with a 67-billion-barrel deposit of crude oil.

Asked about investments in the West Karun oil block that adjoins Iraq's oilfields, the official noted that about $9 billion has already been invested in the block, but did not specify how much the Azadegan contract alone is worth.

“Iran expects Japan to transfer and implement state-of-the-art technology in exploration, drilling and recovering to increase the rate of recovery, which is the most important criteria for Iran."

Iran’s oil exports plummeted to nearly 1 million barrels per day during the sanctions from 4 million barrels in 2010. But Japan remained one of the few countries that continued its purchase of Iranian crude under temporary trade exemptions with Iran.

“We have a close relationship with Japan in the oil sector and will continue to maintain our friendly ties in the future,” the PEDEC official concluded.