Fivefold Rise Likely in South Pars Crude Output

Production from crude oil layers of South Pars Gas Field in the Persian Gulf can increase fivefold from the current level, the spokesman of Majlis Energy Commission said on Tuesday.

“Iran is currently extracting 25,000 barrels per day from South Pars’ crude layers, which can reach 125,000 barrels a day if Maersk signs a deal with the National Iranian Oil Company” for the second development phase of the offshore project, Asadollah Gharekhani was also cited as saying by ISNA.

The Danish conglomerate is the only top-flight western company engaged in talks over the oil layer of South Pars, the world’s largest gas field shared between Iran and Qatar in the Persian Gulf.

Maersk Oil, part of Denmark’s A.P. Moller-Maersk, signed a memorandum of understanding with NIOC in 2016 “to explore opportunities for future collaboration.”

The company sees similar potential in the South Pars oil project. Maersk Oil has estimated potential output for the second phase of Iran’s South Pars oil deposit at 120,000-140,000 barrels per day, Fars News Agency reported on Sunday, citing an NIOC official.

South Pars stretches into Qatari waters where the oil-bearing layer is called Al-Shaheen and shares the same difficult geological characteristics.

Maersk Oil lost its longstanding agreement to operate Al-Shaheen in June last year to French rival Total, which has just taken up the field’s operation.

NIOC had said in a statement on its website in July that Maersk Oil submitted a development proposal for the oil layer in Iran.

Iran began to draw crude oil from South Pars in March using a floating production storage and offloading vessel.

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.

Iranian officials say that due to the layer’s complicated geological structure, advanced horizontal drilling technology is required to tap into the resources, which necessitate cooperation with Maersk.

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.