Iran, Sinopec in Talks Over Yadavaran Oilfield

China's Petroleum and Chemical Corporation, known as Sinopec, is in talks with Iran's Petroleum Engineering and Development Company on developing the second phase of Yadavaran Oilfield in the southern oil-rich Khuzestan Province, PEDEC's chief executive officer said.

"The outcome of negotiations will be publicized in two months and the [potential] agreement is expected to be signed by late May," Noureddine Shahnazi-Zadeh was also quoted as saying by ISNA on Friday.

"The second phase entails boosting output from 110,000 barrels per day to 180,000 bpd and eventually to 270,000 barrels per day," he said.

Iran is currently drawing just over 110,000 bpd from Yadavaran oilfield.

Shahnazi-Zadeh noted that the agreement for Yadavaran's second development phase will be signed within the framework of Iran Petroleum Contract, a new model of contracts that will be used to develop upstream exploration/production projects.

However, the PEDEC chief suggested that work on the second phase could begin under a short-term buyback deal to speed up the field's development before a final agreement is signed under the IPC framework.

Iran hopes that the implementation of cutting-edge enhanced oil recovery techniques will boost the field's production year over the next 20-25 years.

"When a new well is drilled, it may not need recovery practices for one to three years," he said.

PEDEC is holding parallel talks with other international companies, including with oil giant Royal Dutch Shell, the official said without elaboration.

Yadavaran is a joint hydrocarbon deposit with Iraq located 70 kilometers west of the city of Ahvaz in Khuzestan Province. The field is located within the West Karoun oil block that holds an estimated 67 billion barrels of oil in place.

Production from all oilfields in West Karoun block is close to 300,000 barrels a day. According to published reports, Iran is currently drawing crude from the block at an unacceptable extraction rate of 5-6%.

This is while Iraq has fared far better in production from the shared fields, as it has successfully opened up its oil and gas sector to international companies such as Shell, BP, Eni, ExxonMobil, Total and Gazprom.

Iraq's crude oil production has almost doubled to more than 4.5 million barrels per day from 2.4 million bpd at the start of the decade, overtaking sanctions-hit Iran as the second biggest producer of the Organization of Petroleum Exporting Countries.