POGC Given Charge of South Pars Oil Extraction

The National Iranian Oil Company has selected Pars Oil and Gas Company (POGC) as the new contractor of the second development phase of the South Pars Gas Field's oil layer, the deputy for development and engineering at the NIOC said Wednesday.

“Negotiations with Maersk Group over the South Pars oil production project have not come to fruition yet, and before an agreement is reached with the Danish conglomerate, POGC will replace the Iranian Offshore Oil Company as the [interim] contractor of the South Pars oil layer," Gholamreza Manouchehri was quoted as saying by Mehr News Agency.

According to Manouchehri, due to the layer's complicated geological structure, qualified companies need to implement 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.

The official added that Maersk is a top candidate for the venture as the company has advanced horizontal drilling technology.

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.

"Giants such as Maersk can provide us with quality drilling services," said the official.

Maersk has already drilled more than 300 wells and extracted more than 1 billion barrels of oil for Qatar from the Qatari section of South Pars, which is known as the North Dome. According to reports, French energy major Total S.A. took over drilling and production operations in the North Dome from Maersk last year.

Maersk reportedly engaged in talks over the South Pars project in 2001, but Iranian oil officials decided to hand over the project to Petroiran Development Company as the project's first contractor.

Schlumberger Ltd, the world's leading oilfield services provider, was also reportedly interested in drilling the South Pars oil layer, but it failed to reach agreement with the NIOC.

Iran is now drawing crude from South Pars via an advanced $300-million floating production, storage and offloading vessel, named FPSO Cyrus, that was reportedly built in Singapore.

An FPSOs is a ship-shaped vessel, with processing equipment aboard the vessel's deck as well as hydrocarbon storage units. After processing, the offshore facility stores oil or gas before offloading periodically to shuttle tankers or transmitting processed petroleum via pipelines.

"Iran is drawing around 25,000 barrels per day from the South Pars crude oil layers via the FPSO," Manouchehri noted, adding that the second development phase of South Pars oil layer, extraction of 35,000 barrels per day, is a top priority for NIOC.

The oil layer is located 130 kilometers off Iran's coast in the Persian Gulf with an estimated 7 billion barrels of oil in place.