Iran to Offer 13 Oil, Gas Blocks

EghtesadOnline: The National Iranian Oil Company is interested in working with local firms willing to take a reasonable amount of risk, including uncertainty in international markets, tech issues, project-related challenges and difficulties emanating from natural disasters.

News ID: ۷۴۷۳۷۴

20 May 2019

Seyyed Saleh Hendi, the head of NIOC 's Exploration Department made the announcement on the sidelines of the 21st  Convention of Exploration & Production Corporations in Tehran, the NIOC news portal reported.

The event was held to introduce 13 exploration oil and gas blocks to domestic companies wanting to invest in the upstream oil sector.

Pursuant to surveys and explorations over the past few years, 40 blocks were identified of which 13 were specified as top priority, Hendi said, noting that NIOC is planning to offer 13 oil and gas blocks for exploration by July, according to Financial Tribune.

Giving a breakdown on the blocks, he said they include Kavir block in central Iran, Moghan block in Ardabil Province, Bamdad, Mahan and Parsa blocks in the Persian Gulf, Sarakhs, Dousti and Raaz blocks in Koppeh Dagh, aka Turkmen-Khorasan Mountain Range in Iran's northeast, Sistan and Taibad blocks in the east and Abadan, Timab, Zahab and Toudaj blocks in the Zagros region.

"The risk factor is an indispensible part of upstream oil operations," he said.

The upstream oil sector, aka exploration and production sector, includes searching for potential underground or subsea crude oil and natural gas fields, drilling exploratory wells and subsequently operating the wells that recover and bring crude oil and/or raw natural gas to the surface.

Financial requirements to carry out exploration operations in untapped hydrocarbon reserves range between €8 million to €70 million.

Covering Costs

Should exploration operations lead to oil and gas discovery, a new contract is signed with the same firm to develop the field and all costs are covered as soon as production starts, Hendi noted.

Nonetheless "if nothing is discovered, no money will be paid to the exploration firms, and that is why they are recommended to start with blocks that involve less risk," he said.

Hendi suggested that domestic companies would do better to form consortiums or choose a foreign partner before they embark on risky explorations because not only does it help reduce risks, but they also can draw on each others' experience.

Untapped hydrocarbon reserves are huge and encouraging the private sector to enter this sector should be a priority.

Underscoring the role and significance of private firms in the key oil industry, Hendi said it is high time for private contractors to play a bigger role in upstream energy projects.

As long as Iranian firms have access to advanced techniques and adequate funding and accept project risks, NIOC welcomes them to play a role in development projects, he asserted.

Gradual Process

Energy experts say exploration and development projects demand massive financial resources, of which the government in Tehran is now deprived. This is where private firms come in.

The official said NIOC will start with commissioning small projects and gradually move to bigger deals if and when local companies prove their financial and technical prowess.

In 2016 NIOC approved several domestic conglomerates to handle oil and gas projects, namely Petropars, Oil Industries Engineering and Construction Company, Dana Energy Company, Petroiran, Mapna Group as well as the Industrial Development and Renovation Organization of Iran.

NIOC signed a contract with Tenco Exploration & Production Corporation in February to study the Toudaj oil and gas block in Fars Province.

Tenco, which specializes in drilling, seismic, refinery and upstream projects, should submit the results of its geological and drilling surveys to the NIOC in six months. The company has played an important role in developing the giant South Pars Gas Field off the Persian Gulf.