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OMV Poised to Secure Iran Oil Contract
OMV Poised to Secure Iran Oil Contract

OMV Poised to Secure Iran Oil Contract

OMV Poised to Secure Iran Oil Contract

Austrian integrated oil and gas company, OMV, is expected to secure the development rights for an oilfield in the southern Khuzestan Province.

OMV, which had signed a preliminary agreement in January to study Band-e-Karkheh Oilfield, will take charge of the field's development under a new style of contracts, known as Iran Petroleum Contract (IPC), Alireza Zamani, who supervises the field's development, was quoted as saying by the National Iranian Oil Company news portal Tuesday.

"The feasibility of Band-e-Karkheh field has been proven by OMV. The Austrian company will develop the field in a contract with the NIOC," Zamani said.

OMV had reached an agreement in the early 2000s to develop Cheshmeh Khosh and Band-e-Karkheh fields in Khuzestan, but it was forced to drop out following the country's standoff with the West over its nuclear program that led to the introduction of financial and trade restrictions against Tehran.

"OMV has submitted a proposal to develop Band-e-Karkheh following an agreement in January to conduct a survey on the reservoir. It has also discussed the terms of the proposal in meetings with NIOC officials," Zamani said.

A meeting is due to take place between OMV executives and the NIOC in Tehran on Wednesday to discuss the procedures and technicalities of the proposal.

"The contract for Band-e-Karkheh project is expected to be finalized within 6-8 months. The new oil contracts will be used to develop the field," the official noted.

Located 20 kilometers northwest of Ahvaz, Band-e-Karkheh Oilfield holds an estimated 4.5 billion barrels of crude oil in place. Production is expected to reach 20,000 barrels per day in the first phase of development from the present 7,500 barrels daily.

Prospect for Coop.

The Vienna-based company has been looking into investment opportunities in Iran following the lifting of international curbs last year. But collaboration has been stymied due to negotiations on financial matters as well as the slow start of the new petroleum contracts.

Tehran unveiled 50 oil and gas fields and the first details of the new framework in late 2015, but it has yet to sign the first oil deal under the new contracts.

NIOC and OMV have seemingly found themselves increasingly on good terms in the last few weeks.

Rainer Seele, Chief Executive Officer of OMV, said last week his company was in intensive negotiations with the NIOC to obtain $48 million in unpaid dues from the state-run oil company. The debt has been a major impediment in the way of OMV's business in Iran, according to Seele.

OMV started operations in Iran in 2001 as the operator of the Mehr exploration block in the west of the country, but halted operations in 2006 due to sanctions, according to OMV's website.

The company, which is majority owned by private stockholders, has signed an agreement with the Oil Ministry's Research Institute of Petroleum Industry (RIPI) 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.

OMV is also in negotiations with the NIOC to sign a long-term oil export contract. It purchased 1 million barrels of Iranian crude in Sept., its first cargo since 2012.

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