BP to Decide Future Role in Southern Ahvaz Oilfield

Energy giant BP is expected to announce whether or not it wants to play a role in developing Ahvaz Oilfield in Khuzestan Province after evaluating a contractual model proposed by the National Iranian South Oil Company, said Ahmad Mohammadi, head of a special workgroup at the NISOC responsible for developing southern oilfields.

"NISOC provided BP with a plan to develop Ahvaz Oilfield in April and in case ongoing talks come to fruition, the two sides will sign a memorandum of understanding, based on which the field's current output level, at 850,000 barrels per day, will rise to 1 million bpd," Ahmad Mohammadi was quoted as saying by ISNA on Monday.

BP, which was founded more than a century ago as the Anglo-Persian oil company, has multiple business operations in the United States.

"Long before the new model of Iran's oil contracts (Iran Petroleum Contract) was introduced, the London-based BP expressed willingness to cooperate with National Iranian Oil Company to develop Ahvaz Oilfield," Mohammadi said.

"After IPC's introduction, NISOC followed up on its previous negotiations with BP much more seriously," but to no avail.

NISOC has developed a contractual framework that shares the fundamentals of IPC but includes some different technical and financial terms.

According to the official, BP and the NISOC have held more than 10 meetings and BP representatives have visited the site of Ahvaz field regularly over the past year.

"BP said last week that it will announce the result of its evaluation of NISOC's customized model soon," Mohammadi added.

A prospective deal with BP would call for raising Ahvaz field's output by 150,000 bpd.

On the much-needed investment to develop the field, including its Asmari and Bangestan reservoirs, the official noted, "It is difficult to project the funding as long as BP has not presented its development proposal. Moreover, the deal also entails rehabilitation of  dilapidated oil production infrastructure."

BP resumed oil trade with Iran after the lifting of sanctions, ordering its first cargo of condensate for loading late last year, according to Bloomberg.     

However, the London-based oil giant opted not to submit documents to the NIOC to be eligible for participating in the upcoming oil and gas tenders. It also snubbed Iran's 22nd International Oil, Gas, Refining and Petrochemical Exhibition last month.

---- Rhum Field

Iran's state-run oil company and BP received a license from the US Treasury last year to operate their joint gas field in the North Sea following the lifting of international sanctions on Tehran.

Production at the Rhum field was suspended in 2010 when the European Union imposed sanctions on Iran over its nuclear program and only resumed four years later after the UK agreed to set up a temporary management scheme whereby all revenue due to Tehran would be held until sanctions were lifted, Reuters reported.

Following the removal of EU and United Nations sanctions in January 2016, the temporary management scheme ceased.

Iran regained control of its stake and on Sept. 29, 2016, BP obtained a license from the US Treasury, through its sanctions enforcement arm - the Office of Foreign Asset Control (OFAC), to continue operations at the field, BP said in its annual report.