Iran Keen to Expand Overseas E&P Operations

EghtesadOnline: Collaboration with international firms for oil exploration/production overseas is on the agenda of the National Iranian Oil Company, says the director for drilling operations.

News ID: ۷۳۹۳۶۳

22 January 2017

“Plans are in place to help domestic oil and gas exploration companies get involved in overseas projects as it will help them gain international recognition," Saleh Hendi was quoted as saying by ISNA.

Hendi said so long as Iranian engineers and enterprises do not take exploratory assignments in other countries, they cannot gain access to the state-of-the-art exploration and drilling expertise.

"That is why policies have been adopted to help facilitate Iranian exploration firms' presence in E&P ventures overseas," he noted.

Highlighting NIOC collaboration with oil and gas giants, the official said the state oil company and BP cooperated in a joint exploration venture in Rhum gas field in the North Sea in the last decade, but Iran was forced to abandon the project due to tighter sanctions over the  nuclear program dispute with the West, Financial Tribune reported.

"NIOC has widened the scope of exploration activities in the Persian Gulf," Hendi noted, adding that oil/gas exploration in the strategic waterway is of significance for the key industry.

--- Feasibility Studies in Oman Sea

Asked about extending oil and gas development studies in the Sea of Oman, he said, "Iran has so far not drilled in the Sea of Oman. But extensive studies are to be carried out in the sixth five-year economic development plan (2016-21)."

NIOC’s exploration department is working in tandem with the Research Institute of Petroleum Industry to expand studies in the undeveloped sea. Studies include geological surveys close to Iran’s Makran Coast stretching along the Oman Sea.

The official said the second phase of oil and gas studies in the Sea of Oman is being planned and will be carried out in the near future.

“The volume of shale gas deposits found in the Sea of Oman is yet to be estimated, but based on initial findings we predict significant reserves.”

Hendi cast doubt on the feasibility of tapping into shale formations because of higher costs as well as the lack of modern shale drilling technology.

More geological surveys need to be conducted in the region, he said. “The costs and risks associated with (oil and gas) exploration is increasing and we may not be able to afford  developing very large reservoirs for now.”

"Initially, one well will be drilled in one of the joint oilfields in the Persian Gulf and  exploration priorities in the zone will be announced gradually."

Shale oil and gas is extracted through a process known as hydraulic fracturing, or fracking, which is costlier than the exploration of conventional reservoirs.

According to reports, the break-even costs for North American shale producers is thought to be about three times higher than similar costs for Middle Eastern producers.

Another downside of shale is that shale wells deplete faster than conventional wells, with production rates falling about 70% after the first year.