Baku, Azerbaijan, Jan. 12
By Dalga Khatinoglu – Trend:
Iran prioritized South Pars gas field as well as five major oil fields in West Karoon Block in 2016.
During 2016, Iran increased the production capacity in South Pars – joint between Iran and Qatar, with 14 trillion cubic meters of gas and 18 billion barrels of gas condensate being on the Iranian side – by almost 80 million cubic meters per day (mcm/d) to 500 mcm/d. This volume, however, is not the actual production in average during 2016.
According to a document prepared by Oil Ministry and seen by Trend, Iran produced about 430 mcm/d of gas from South Pars in 1Q16, however the figure for 2Q16 and 3Q16 was 400 mcm/d in average. During 4Q16, Iran increased the gas production from the field to about 460 mcm/d in average.
It seems Iran’s actual gas output from South Pars reached about 152-156 billion cubic meters (bcm) in 2016, which indicates a 17-percent growth year-on-year. Therefore, the country’s gross gas output (including re-injection and flaring) would have stood at about 280 bcm last year.
Iran plans to increase South Pars output to above 800 mcm/d by 2021 by completing all 24 phases of South Pars to bring the country’s total gas output to 1.25 bcm/d (or 456 bcm/y).
West Karoon Block
One of the major projects in Iran’s upstream oil sector includes the first phase of five fields (West Karoon Block) in Iranian western regions with 66.7 billion barrels of in-situ oil reserves, sharing 9.5 percent of the country’s total in-situ oil and gas condensate reserves. All of the fields are joint with Iraq.
Iran has started developing the first phase of these fields and currently the production capacity is going to reach about 280,000 barrels per day (b/d), though the actual output is half of this volume. However, the major problem lies in enhancing the recovery rate of the fields, which is below 10 percent in average.
Iran has signed buy-back agreements with Chinese and domestic companies to develop these fields, but it is preparing to sign further deals with foreign companies based on the newly-designed agreements, called the Iran Petroleum Contract (IPC), to complete them.
Yadavaran
Iran has signed a buy-back contract with China’s Sinopec to develop the first phase of Yadavaran, which contains 34 billion barrels of in-situ oil reserves.
The project has been divided into 3 phases.
With completion of the first phase the output would reach 85,000 b/d, and in second and third phases the output would reach 180,000 b/d and 300,000 b/d, respectively.
According to a document prepared by Oil Ministry and seen by Trend, the first phase of Yadavaran was developed by 99.4 percent as of January 1, 2017, with spending of $2.36 billion (including $2.166 billion capex) and production of 40,268 b/d of oil during 2016. The figure is 13,000 b/d less than in 2014. In total, Iran has produced 65.9 million barrels of oil cumulatively from the field since 2012.
North Azadegan
Iran has a buy-back contract with China’s CNPCI to develop the North Azadegan field. The first phase of the project was developed by 99.92 percent as of January 1, 2017 with actual output of 75,000 b/d.
Total cost of the first phase was $2.36 billion (including $2.166 billion capex).
North Azadegan contains 5.6 billion barrels of in-situ oil reserves and the cumulative production at the field, since March 2016, has reached 14.87 million barrels.
In the second phase of this project, the output level would double to hit 150,000 b/d.
South Azadegan
Iran also had an agreement with CNPCI to develop South Azadegan, but the country cancelled the deal with the Chinese company in 2014 because of long-delayed development process.
For instance, according to an official document, CNPCI had invested $355 million until 2014, which is one third of the projected investment. CNPCI also drilled only 12 wells using 5 rigs instead of the projected 37 wells and 18 active rigs by 2014. In total, before leaving the project, the Chinese company developed the project by 9 percent instead of the projected 18 percent.
According to the official document, the project’s first phase was developed by 31.42 percent as of January 1, 2017. The first phase needs $6.1 billion of investment to produce 320,000 b/d of oil. The second phase would add 280,000 b/d to this volume.
The field contains 25.34 billion barrels of in-situ oil and its recovery rate very low at is 6.6 percent. Currently five foreign companies, including France’s Total and Japan’s Inpex are studying the Azadegan field and the ways of increasing the recovery rate, based on confidentiality agreements.
North Yaran
Iran is developing the North Yaran field with local companies – led by Persia Oil and Gas Industry Company – which have 73 percent share based on a buy-back contract. The rest of shares belong to foreign companies.
The field needs $660 million of investment, of which $585 million has been spent as of the beginning of 2017. North Yaran has been developed by 94 percent.
Currently, Iran produces 10,000 b/d of oil from the field, but the volume is expected to reach its final capacity of 30,000 b/d, projected for March 2017.
South Yaran
Like North Yaran, the South Yaran field is also being developed by local companies to produce 50,000 b/d of oil by July 2017. The project has been developed by 79 percent as of January 1, 2017 and needs $1.1 billion of investment in total.
The overall reserves of North and South Yaran are estimated at about 1 billion barrels.
After completion of all the phases of the mentioned oil fields, their production capacity would reach 1.04 million b/d by 2021.
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Dalga Khatinoglu is the head of Trend Agency’s Iran news service, follow him on Twitter: @dalgakhatinoglu
