E&P Firms Rejuvenate Iran Oil Industry
After the Iranian Ministry of Petroleum cleared Iranian Exploration & Production (E&P) companies to form partnership with Iranian and foreign companies for the development of oil and gas fields in Iran, some of them moved to sign memorandums of understanding with the National Iranian Oil Company (NIOC) to conduct feasibility studies on the fields. Some have even gone further to sign agreements. These companies hope to be partner with foreign companies in developing big fields, while they expect to become project operator in the development of small fields which need not much investment and no sophisticated technology.
E&P companies are expected to learn development of technology through working alongside leading international companies. However, Iranian firms need to modify their structures and get ready to assume their new responsibility within the framework of E&P companies and learn how to work in such business environment with a view to operating projects abroad.
"Iran Petroleum" has interviewed several senior managers of Iranian E&P companies to shed some more light on their latest activities.
MOU Signed with Foreign Financers
CEO of the Iranian Offshore Engineering and Construction Company (IOEC) Abdol-Qasem Rahmani said several MOUs, worth between $400 and $500 million, had been signed with foreign financers for the development of oil and gas fields.
Referring to structural changes and the approaches of these companies over the past two years to become E&P companies, he said: "The drilling section of the company managed to drill 22 wells in Phase 14 of South Pars [gas field] in less than 700 days, which is a record."
He said that IOEC had undergone structural changes in recent years with a view to becoming an E&P company. For instance, new divisions like oil and gas reservoir operation and studies have been established in the company.
Rahmani believes that converting general contractor companies into E&P companies would require a long process of conversion.
Noting that IOOC had proposed the development of three onshore oil and gas fields to the Office of Deputy CEO of NIOC for Engineering and Development, he said: "We are in the process of signing agreement with an Iranian consulting company to study these three fields. In the meantime, we are in talks with three foreign companies for their partnership in the development of these fields."
"Under new oil contracts, foreign companies have to join Iranian companies for developing oil and gas fields. Therefore, we announce our financial readiness for such cooperation. We have so far signed several MOUs with $500 million with foreign financiers to that effect," he added.
Readiness to Develop 5 H/C Fields
CEO of Drilling Company International (DCI) Fazel Jamalzadeh said that Petroiran Development Company (PEDCO) had offered to develop the Siri, Mansouri, Susangerd, and Danan oil fields, as well as Phase 2 of the South Pars Oil Layer.
He said that PEDCO had worked for two decades alongside such big oil companies as France's Total, Italy's Eni, Royal Dutch Shell and Norway's Statoil and gained a lot of experience.
He added that the establishment of DCI was per se a first step for it to become an E&P company. DCI currently owns two offshore drilling rigs, he said.
Jamalzadeh said that Iranian E&P companies would gradually see their competition pick up speed, adding: "Therefore, Iranian and foreign companies must be provided with equal chances for competition, so that domestic companies would be able to work with foreign financers within the framework of new oil contracts."
"PEDCO is currently in talks with several Asian companies for carrying out EPDF projects to get financing. Fortunately, these negotiations have led to the signature of MOU," said Jamalzadeh.
He said PEDCO had found its foreign partners to operate oil and gas projects in Iran, adding: "We are currently waiting for NIOC to award projects. There is also an MOU signed by us and NIOC for studying Susangerd and Danan fields. Therefore, we have focused on these fields."
Jamalzadeh said the MOU for the development of Siri and Mansouri fields had been presented to the client pending approval.
MDP for Susangerd Development
CEO of IDRO Oil Nasrollah Zarei said that viewpoints of his company and Austria's HOT Engineering GmbH about feasibility studies conducted on the development of the Susangered field had been submitted to the Arvandan Oil and Gas Production Company.
"We will soon submit the final copy of MDP (Master Development Plan) for this field to the client," he said.
Zarei referred to the signature of MOUs with NIOC for conducting feasibility studies on the Susangerd, West Paydar and Cheshmeh-Khosh oil fields last year, saying: "We have decided to focus on the Susangerd field. That is why we signed an agreement with Austria's HOT Engineering. Training workshops have since been held in Iran with their collaboration on enhanced oil recovery."
He said that IDRO Oil had signed MOUs with India's ONGC and Russia's Zarubezhneft to conduct feasibility studies on the Susangerd field. He added that technical meetings with the Russian company had reached the final stage.
"IDRO has always been willing to serve as operator in the Susangerd project and it has made huge efforts for financing. We have had good talks with Chinese financiers," said Zarei.
"To finance the development of the Susangerd field, IDRO will use domestic credit, Bank of Industry, Mine and Trade, National Development Fund of Iran and domestic banks," he said.
Talks with Russian, Chinese Firms
CEO of Global Petro Tech Kish Company Ahmad Qale'bani said: "We are currently in talks with our Russian and Chinese partners for financing projects over a two-year period."
He said his company's offshoots – Asr Kish, Sarvak Kish, Global Dubai and Persia Kala – had become active.
"Last year many structural changes were made in this company and operational activities were assigned to Asr Kish," said Qale'bani.
He said that Global Petro Tech Kish Company was in talks with NIOC to develop the Sumar, Esfandiar and Changuleh fields, adding: "We are currently waiting for NIOC to study our proposals for these fields."
Regarding financing future projects of Global Petro Tech Kish Company, he added: "Currently, we are in talks with our Russian and Chinese partners for two-year deferred payment to finance the projects. Meanwhile, we have reached good results in our talks with a European investor for the development of the Sumar field."
Qale'bani pointed to the Iran Petroleum Contract (IPC) terms of contract regarding partnership between Iranian and foreign companies, saying: "We hope that infrastructure capabilities developed in the private sector during years of sanctions will be used effectively within the framework of these contracts."
Talks with Zarubezhneft
CEO of Ghadir E&P Holding Abdorreza Hosseinnejad heaped praise on Iranian Minister of Petroleum Bijan Zangeneh for his initiative to establish E&P companies, saying the outcome of such initiative would be seen in the future. He said that E&P companies did not exist in the country before."Now a good opportunity has been created for the growth and progress of companies that are able to step into exploration and production," he added.
Under IPC terms, he said, Iranian companies have to hire a foreign partner equipped with advanced technology. Meantime, for the development of big fields, foreign companies are required to have an Iranian E&P company as partner.
"Such interaction with international companies will result in the growth and progress of domestic companies and their technical and operational standards. The companies which have been cleared by NIOC are able to become E&P companies, which would help them participate in future development projects both inside and outside of the country," said Hosseinnejad.
He said diversifying international partners in the petroleum industry and choosing a variety of companies from different countries would bring about more certainty for investors.
Referring to Ghadir's cooperation with Russia's Zarubezhneft, he said: "Russia's Zarubezhneft has been endorsed by NIOC as a qualified foreign company in the E&P sector. It has good technical and international experience in the petroleum industry and will be able to meet our technological needs for engineering and production from reservoirs."
"The company has had successful experience in enhancing the recovery rate, new methods of drilling, countering asphaltene and making field development economical," said Hosseinnejad.
"Furthermore, since investment in upstream petroleum industry projects needs big sums, Unit International of Turkey will be involved in these projects for financing and investment," he added.
"After going through various stages and accepting mutual terms and conditions, we signed an outline agreement. The Russian and Turkish companies are ready to sign deals with us in order to cooperate with us in any of the fields," said Hosseinnejad.
Planning for Ab Teymour Field
Bahram Masoudi, director of marketing at Iran Ofogh Industrial Development Company (IOID), said an agreement had been signed with a foreign company for cooperation in Ab Teymour oil field.
"For presence in this project, we will focus on foreign financing," he said.
"For financing this project, our company is focused on foreign financial resources and we have signed an agreement with a British consulting company for financing of this project," he added.
Masoudi said that IOID had three decades of experience in offshore and onshore fields like those located in the West Karoun area along the border with Iraq.
IOID had signed more than 17 agreements with Italy's Eni for logistic services in the development of Darquain oil field. "Now that Eni has left Iran, IOID has been in charge of maintenance of oil installations in the Darquain field for more than eight years."
He said that IOID was providing technical and engineering services to China's Sinopec and CNPC in the West Karoun area.
"After we were recognized as an E&P company, we registered a company under Ofogh Energy because we have been assigned missions which require us to undergo major structural changes," said Masoudi.
He said that holding training workshops and seminars in cooperation with European knowledge-based companies for the realization of E&P companies' objectives was instrumental.
"Recently we presented our own proposals for the development of two oil fields in the West Karoun area to NIOC," said Masoudi.
Regardless of the US's withdrawal from the 2015 nuclear deal signed between Iran and six world powers, remarks by Iranian E&P companies indicate that Iran's petroleum industry continues to remain attractive to investors. Iranian E&P companies are also preparing themselves to get engaged in this sector.
E&P companies owe their survival to application and development of modern technologies. Therefore, Iranian E&P companies would be able to open a window for the transfer of technology into Iran's petroleum industry.
Growing global demand for oil has increased recovery from resources, subsequently cutting into reserves and causing decline in natural production.
Therefore, the challenge faced with by E&P companies is not bound to exploring new oil fields. It also involves boosting production from operating fields. New solutions are needed in order to overcome both challenges.