Iran's First IPC-Based Oil Tender to Be Finalized in 8 Months

EghtesadOnline: Oil Minister Bijan Namdar Zanganeh said on Tuesday Iran's first oil tender within the framework of Iran Petroleum Contract, the country's new model of contracts for oil and gas projects, would be completed in eight months.

News ID: ۷۷۸۷۷۱

26 August 2017

"Multinationals, including Italian oil and gas firm Eni, China's CNPC, Royal Dutch Shell, France's Total, Japan's Inpex and Malaysia's Petronas, have submitted their master development plans to expand Azadegan Oilfield, though the assessment of proposals and selection of the most suitable candidate will last eight months that is quite normal for such a giant megaproject," Zanganeh was quoted as saying by Mehr News Agency.

Last month, Tehran finalized the first IPC-based deal, outside of a tender process, with French energy giant Total S.A. to develop Phase 11 of the vast South Pars Gas Field in the Persian Gulf.

"Iran has envisaged two major development phases for South Azadegan: Production capacity is expected to reach 320,000 barrels a day in the first phase, while the target for the second phase depends on output levels in the first phase of development," Financial Tribune quoted him as saying.

South Azadegan is part of a string of oilfields in the West Karoun block in the southern oil-rich Khuzestan Province near the border with Iraq. The block includes North Azadegan, Yaran, Yadavaran and Darkhovein fields, holding an estimated 67 billion barrels of oil in place.

Zanganeh noted that enhancing oilfields' recovery rate with the help of international energy majors tops the ministry's agenda in the next four years.

Production is currently about 80,000 barrels per day from South Azadegan. Plans are in place to double the volume by the end of the current fiscal year in March 2018.

According to Zanganeh, Iran cannot have access to cutting-edge know-how "unless it collaborates with topnotch foreign firms".

"Joining hands with leading enterprises in oil industry can help us not only generate more revenues via increasing recovery factor but also attract the investment required for keeping the wheels of the oil industry spinning," he said, hoping that the South Azadegan tender will pave the way for the presence of foreign oil companies in more projects.

Iraqi Energy Market

In a meeting with Leis Abdolhossein Shaher, the special envoy of Iraqi Oil Minister Jabar al-Luaibi, in Tehran this week, Zanganeh said Iran is ready to boost cooperation with Baghdad in oil and gas sectors.

Pointing to natural gas exports to Iraq, Zanganeh said the two sides can implement more energy projects in joint oil and gas fields by sharing their experiences.

Iran began transferring natural gas to the western Arab neighbor via pipeline in June.

Reportedly, exports have begun at a rate of 7 million cubic meters per day and will eventually increase to 35 mcm daily.

Referring to ongoing negotiations with Iran to develop joint oilfields together, Shaher added that as soon as talks produce the desired results, the oilfields in Kermanshah and Khuzestan provinces will be developed by a single contractor based on a master plan.

The two neighbors share six oilfields, namely Azar, Dehloran, West Paydar, Naft-Shahr, Azadegan and Yadavaran.

According to the Iraqi official, Baghdad is in talks with Exxon Mobil and PetroChina about investing in a multibillion-dollar project to boost output from the Luhais, Nassiriya, Tuba, Nahr Bin Umar and Artawi oilfields.