Touraj Dehqani. CEO of Petroleum Engineering and Development Company (PEDEC). has said the company plans to increase production from the Yadavaran oil field. He also told Iran Petroleum that Iran was in talks with China’s Sinopec for the second phase development of the Yadavaran field. He noted that in case the Chinese company shows no willingness to develop this field. Development Co. (PEDEC)`>.PEDEC would drill 25 wells in order to add 50.000 b d to the field’s output.
Dehqani also said National Iranian Oil Company (NIOC) would accept no feet-dragging in recovery from the oil fields located in West Karoun. where Iran shares these reservoirs with neighboring Iraq.
Here is the full text of the interview Dehqani granted to Iran Petroleum:
Iran is currently ahead of its neighbors in recovery from the jointly owned fields located in the West Karoun area. But the US sanctions re-imposed on Iran and the ensuing unwillingness of foreign investors to develop these fields have given rise to anxieties that NIOC would delay its development plans for West Karoun. What do you think?
No. there is no delay in the development of West Karoun fields. If we look at official data about production from these fields we will see that even Iraq is not faced with the sanctions Iran is grappling with. but they are lagging behind us. We are under sanctions. but our production is continuing. But regarding delay in production. we will not accept such a thing which pertains to our national interests. In case any delay is found we will take action accordingly.
Regarding West Karoun I have to say that this sector is high-risk and we will not achieve whatever we forecast about oil. In fact there is huge oil in West Karoun but the reservoir is not attractive enough. making oil extraction difficult and adding to production costs. Sometimes host companies do not reach agreement with foreign parties due to costs. In other cases. throughout the process they may see that their estimates are different from what they knew about the field’s deposits and recoverable oil.
Add to all these issues the US sanctions on Iran’s petroleum industry. You’ll see that Iran has not delayed extraction from West Karoun oil fields. We can review oil production data for West Karoun. The current production capacity of oil from the West Karoun oil fields exceeds 350.000 b d. That is while the production capacity was less than 70.000 b d by 2013. This factor has been multiplied by five in recent years. Meantime. development of the North Azadegan field (phase 1). Yadavaran (phase 1) and North Yaran provided a total output of 215.000 b d in 2016. Development of the South Azadegan oil field was also assigned to Iranian contractors after the foreign company involved in the project was removed in 2014 due to its delay. More than 120 wells have since been drilled. quadrupling the production capacity of the field.
So you mean that your development plans for increasing production from such fields are continuing. aren’t they?
Sure! In the fields with good potential for increased capacity we follow our output hike plans. By next March. we will add 10.000 b d to the Yadavaran output. We also plan to add another 50.000 b d to the South Azadegan output as soon as NIOC gives its nod. Regarding North Azadegan. I have to say that this reservoir is not very big. but we can increase its output. We recently received proposals about drilling several wells there in order to boost output. We are reviewing these proposals.
When will increased Yadavaran output plans become operational? Does it mean that you will no longer hold any talks with the Chinese before starting the second-phase development and that it would be awarded to Iranian contractors?
We are still in talks with the Chinese over the second-phase development of this field. But our colleagues at Development Co. (PEDEC)`>.PEDEC have drawn up a complementary plan for the development of the Yadavaran field and presented to the NIOC Directorate of Consolidated Planning. Based on this plan. the production capacity of the Yadavaran field would increase another 50.000 b d after the drilling of 25 wells. In fact our objective was to implement the project ourselves if Chinese companies fail to come for whatsoever reason. As soon as NIOC gives its approval we will start our work. I have to note that we rely on domestic contractors in the development of West Karoun fields. But we will not cut our interaction with foreign companies in order to not lag behind the world in terms of knowledge.
You referred to the South Azadegan field. It is among fields whose capacity is increasing. Recently. MOT facilities were put online there.
That’s true. A foreign investor built the MOT facility for South Azadegan with a capacity of 50.000 b d in less than a year under a build-operate-own (BOO) agreement. This project came online while many thought due to the sanctions imposed on Iran we will not be able to import the slightest item and no foreign investor would come to Iran. Now that the project has become operational I have to say that over the past one year we have imported all necessary times and the foreign investor said the project was implemented in Iran at a much higher speed than everywhere else. The project was ready in less than five months. This project is important for us if we take into consideration the fact that 70% of field development costs go to drilling wells. 20% to laying pipes and lines and less than 10% to processing installations. Normally. the pace of work is slow when it comes to building processing units. Therefore we decided to resolve this challenge in the South Azadegan field and we reached our objective thanks to our idea of building MOT. The minister of petroleum has ordered that the same project be implemented in other fields.
What stage is the agreement for developing Sepehr and Jofair and also Aban and West Paydar in now?
Regarding the Sepehr and Jofair fields. whose agreement was signed with Pasargard Energy Development Company under the IPC framework last March. I have to say that the Joint Management Committee has met and issued necessary permits for hiring contractors. Development Co. (PEDC)`>.PEDC has said drilling will start in 2020 for spudding 16 wells with the help of four rigs. The contractor has no problem with financing the project up to $150 million.
As for the Aban and West Paydar fields. the agreement was signed between Dana Energy and its foreign partners on one side and NIOC on the other. The contractor is currently implementing the project. The contractor is mainly involved in providing and installing downhole pumps. So far four pumps have been installed and we will soon see production increase from these fields.
The agreement for the development of the Sepehr and Jofair fields was signed for a 20-year period. aimed at the production of 110.000 b d of oil and an accumulated output of 512 million barrels over 20 years. Direct CAPEX was estimated at $2.427 billion and indirect CAPEX was estimated at $413 million.
The agreement for the Aban and West Paydar fields development was signed for 10 years with a view to improving the recovery rate and increasing production. The objective is to reach 48.000 b d production over a 10-year period. which would be renewable subject to the parties’ consent.