Iran is stepping up efforts to attract the global oil and gas industry, as well as operate beyond its own boundaries. Delegates from Iran were in Britain recently meeting oil sector training groups, and promoting the Persian Gulf Gas Resources conference in Tehran next month. The event is the fourth such conference assembled by Iran's Institute for International Energy Studies (IIES). The group's previous effort was a Caspian Sea oil conference in Tehran in 1998.
The President of IIES is Seyed Goldam Hassantash, also a lecturer at Tehran Azad University and formerly an adviser to the Petroleum Minister, as well as being an administrative officer of the state oil concern, NIOC. IIES itself serves as an advisory body on petroleum affairs, and also conducts wide-ranging upstream and downstream research. Areas of special expertise include energy conservation and energy economics - the emphasis has been very much on the theoretical side.
However, under Hassantash, the institute is now expanding into new sectors of oilfield engineering. "We are particularly keen to work with specialists in gas-to-liquids technology," he says. IIES also seeks to broaden its knowledge of directional drilling techniques.
"Within IIES, we have departments that concentrate on offshore studies, with learned people undertaking research," he points out. This includes a recent simulation/modeling exercise for the Reshadat Field. "At the same time, some of the advanced technologies that are emerging are not applicable to Iran, because they relate largely to deepwater." The only potential deepwater acreage off Iran - in the southern Caspian - is some way off being explored.
In terms of all-round oilfield expertise, Iran considers itself ahead of most other nations in the Middle East. One of its most respected institutes is the Abadan Technical School, founded with British assistance in the 1930s. Iranian engineers are particularly skilled in high pressure, high temperature technologies, Hassantash claims, as nearly all the Persian Gulf fields are HP/HT.
Technology inflow
Since 1995, there has been an influx of international service and oil companies into Iran, following the opening up of offshore fields in the Persian Gulf for rehabilitation, under the Petroleum Ministry's "buyback" terms. This has brought Iranian engineers into frequent contact with the leading drilling contractors. However, active collaborations are ruled out with some groups while the US trade embargo stays in place.
The key partnership developments to date are Sirri A and E and South Pars stages 2 and 3, both operated by Total in the development stage. However, Hassantash stresses that in these and future offshore developments, conceptual engineering is shared between the Iranian and foreign oil company partners. Hardware configurations, for these and other projects still to be signed, have mostly been formulated by NIOC over the past decade.
The contractual terms of the buyback projects emphasize the need for the foreign partners to transfer technology to Iranian nationals. Where possible, the government favors appointment of local subcontractors and fabricators. The state-owned Iranian Offshore Engineering Company (IOEC) and another engineering concern called SADRA operate a joint fabrication venture for war-damaged Iranian platforms. Also, National Iranian Drilling (NIDC) is capable of conversions and newbuildings of jackup rigs and platforms. It can handle topsides assemblies weighing up to 2,500 tons.
Project status
Iranian yards are not equipped to install topsides packages directly onto floaters, although as Hassantash points out, there is little need for FPSOs in the Persian Gulf at present, with most of the buyback projects relating to large fields that are not marginal.
The SADRA/IOEC joint venture built some modules for the Sirri A and E platforms, although the bulk of the work was entrusted to a yard in the UAE. Iran's government accepts the commercial reality that projects have to meet tighter schedules, and at present, competing yards in the region have an advantage in being able to quickly source all materials and labor skills (that includes swift issue of visas). But Iranian yards should come into the frame more as further buyback projects get underway.
International response to the offerings has been a little lower than expected, due partly to the coinciding fall in the oil price. However, those contracts that have been signed are for really major projects, Hassantash points out. They include:
- Dorood, where Elf and Agip are the foreign participants. Concerted engineering should get underway shortly. This large oil field lies beneath Kharg Island - NIOC's original plan was to inject 400 MMcf/d of gas from nearby fields offshore to boost recovery from Dorood by up to 600 million bbl. Dorood already produces oil and gas from 10 offshore wells, but there are no dedicated offshore installations. For the redevelopment, several platforms may be installed in water depths of up to 150 ft
- Balal brings together Elf and Calgary-based Bow Valley Energy. This oil field, discovered in 1967, holds an estimated 134 million bbl in two separate formations. Four platforms were called for under the original NIOC scheme.
- Pars, Soroosh: Of the various other projects on offer, South Pars phases IV and V should be signed shortly, following intensive negotiations. Talks on Soroosh, however, have been unproductive so far. This field, situated 80 km west of Kharg Island, has been shut in since the outbreak of the war with Iraq in 1980. Previously, it had produced over 86 million bbl of oil. For the redevelopment, NIOC had envisaged refurbishment of 14 of the field's platforms, and perhaps converting a tanker to a permanently moored FPSO, with the overall aim of boosting production to 60,000 b/d.
Buyback agreement
A mandatory feature of all the buyback agreements is promptly implemented 3D seismic surveys. The National Iranian Exploration Company's fleet is well equipped to perform 3D acquisition, says Hassantash. As for exploration drilling, the National Iranian Drilling Company maintains a sizeable fleet of jackups.
"There are some sectors of the Persian Gulf that need further exploration," he says, "particularly in the east - and these areas are being explored, as part of ongoing drilling activities." No major new discoveries have been reported lately, but all wells have been "worthwhile" in terms of enhanced data gathering, he claims.
The southern Caspian is the main area undergoing new geological studies, led by the NIOC/Royal Dutch Shell/Lasmo combine. This group plans to acquire 1,000 km of new 2D seismic on acreage awarded by the Petroleum Ministry late last year.
In the central Caspian Sea, Turkmenistan and Azerbaijan are suddenly competing to pipe gas to western markets, following BP Amoco's discovery in the Shah Deniz field. Iran is not party to discussions of any of the planned Trans-Caucasus/offshore pipelines, but it does have plans to be a major exporter of gas from the Persian Gulf. Up to 10% of its gas production will eventually be set aside for exports, says Hassantash. "Especially for East Asian countries, Iran is the most viable and accessible market for gas. Had it not been for the Indo-Pakistan skirmishes, we could have been supplying these countries much earlier."
A critical factor in all Iran's plans will be the planned restructuring of its petroleum sector. Ultimately smaller, more easily managed companies should emerge. NIOC itself will likely also seek involvement in exploration and production outside Iran.
Iran conference to explore opportunities
Persian Gulf Gas Resources will be staged in Tehran on November 7-8, 1999. There will be a special session overseen by the Ministry of Petroleum concerning the launch of new projects in Iran's gas industry. In addition, a workshop will cover prospects for Iranian gas and its export potential. Main topics to be covered by speakers at the conference include:
- The role of the Persian Gulf in meeting global gas needs
- Exports, prospects, and limitations
- Mutual cooperation of gas producing companies and countries in the region
- Gas pipeline projects in the Persian Gulf
- Technological, environmental, and project financing issues
- Natural gas pricing trends
For more information, contact the Conference Secretariat, PO Box 19395-4757 Tehran, I.R. of Iran. Tel: (9821) 874 6023 or 874 8353, Fax: (9821) 874 8786, E-Mail: iies-conference @iname.com, http://www.iees.org.
