Middle East: Iran

MIDDLE EAST

Iran

According to an annual IHS Energy Group study, Iran topped the list of the world’s most prolific oil discoverers during 1999. The fundamentalist Islamic republic’s four wildcat finds added 5 billion bbl of potential new oil reserves.

Iran’s economy relies heavily on oil export revenues, so it was hit hard by record-low prices during 1998 and early 1999. However, skyrocketing oil prices have helped the country recover during the last 12 months. Iran’s gross domestic product (GDP) grew by 2.5% during 1999. Real GDP is set to grow at a more rapid, 4.2% rate this year.

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Exploration. In September 1999, Iran announced its largest oil find in 30 years. The field was named "Azadegan" and is said to contain 26 billion bbl of oil-in-place, with a 400,000-bpd production potential. Azadegan is about 60 mi west of the country’s giant Ahwaz oil field and only 6 mi east of the Iraqi border. As far as Western observers can tell, there is no interconnection between Azadegan and Iraq’s giant Majnoon oil field, only 15 mi away. The discovery well reportedly tested between 4,000 and 5,000 bopd, at a depth of 15,225 ft. State oil company NIOC will begin developing the field by the end of March 2001. "Azadegan" means "freed ones" in Farsi, a reference to Iranian prisoners of war that were released by Iraq after the two countries’ 1980 – 1988 war ended.

In April 2000, Oil Minister Bijan Zanganeh revealed that NIOC had struck the country’s largest onshore, sweet gas field. Named "Tabnak," the find in southern Iran is said to contain reserves totaling 15.4 Tcf of gas and 240 million bbl of condensate. Zanganeh said the field will be able to produce between 1.5 Bcfgd and 2.0 Bcfgd. Officials said they would open Tabnak and two other fields to bidding by foreign operators. They hoped to begin developing Tabnak sometime in the second half of the current Iranian year, which runs to mid-March 2001.

Local firm PetroIran Development Co. (PEDCO) was awarded two exploration contracts last September, covering six disputed structures (Alborz 1, 2, 3 and 4; plus Babol and Boustan) in the Caspian. During the first phase, a $50-million budget will be in effect. Work will encompass seismic surveys and limited exploration drilling.

During August 1999, a Shell / Lasmo / Kepco group began a 2-D seismic survey in a 3,860-sq-mi area of the Iranian Caspian. Veba Oil and Gas farmed into the project last November.

Drilling/development. Per data provided by NIOC, Iranian drilling increased 8%, but offshore wells drilled remained steady, at 20. NIOC projects that drilling will grow 4.5% this year, including 28 wells offshore. Iran recently held talks with Kuwait over the disputed eastern end of the Divided Neutral Zone shared by Kuwait and Saudi Arabia. The latter two nations have protested Iran’s drilling earlier this year at Dorra gas field, which extends well into the Neutral Zone.

Development work continues at South Pars gas field, Iran’s extension of Qatar’s giant North gas field. Early this year, South Pars’ gas reserves figure was raised 25% (to 435 Tcf from 350 Tcf) by Pars Oil and Gas Co., which is operating the field’s Phase 1 development (one platform and a 1-Bcfd gas processing plant). Meanwhile, operator TotalFinaElf is progressing on South Pars Phases 2 and 3 (two-train gas processing plant, two platforms and a pipeline). As of early 2000, the project was already 20% complete. Phases 1 through 3 are to supply domestic gas usage. Phases 4 through 8 will be for export and reinjection. At press time, the Oil Ministry was ready to award Phases 4 and 5 to ENI and local firm Petropars, with Phases 6 through 8 slated for an unnamed Iranian firm.

Last November, Shell signed a deal with NIOC to act as contractor for the $800-million development of Soroush and Nowruz oil fields, in shallow waters 50 mi west of Kharg Island. The fields’ combined reserves are 1.05 billion bbl, and early output may begin in autumn 2001. At full output, the fields will produce 190,000 bopd, combined.

NIOC in mid-2000 awarded the $550-million Darquain field development to ENI. Darquain is 28 mi north of Abadan, east of the Iraqi border, and holds 2.9 billion bbl of oil-in-place. Peak output at this field should hit 200,000 bopd after six to seven years.

With Darquain awarded, foreign firms will turn to bidding on development of the Bangestan reservoirs at Ab-Teymour, Ahwaz and Mansouri fields.

Production. Iran’s combined crude and condensate output declined 2% last year (see main table in "World Trends"), in line with OPEC’s production cutbacks. Condensate accounted for 4% of the total. Natural gas production from 151 gas wells, plus associated output, increased 9.5%, to 10.14 Bcfd.

Iranian oil reserves rose slightly last year, to 93.1 billion bbl. Gas reserves have been revised downwards 3%, to 790 Tcf.