Page 4 - MEOG Week 28

MEOG Commentary MEOG
Iran awards Yaran contract, but no sign of change
Tehran has awarded a development contract to a local company for the Yaran eld, but while talk has turned to an end of sanctions, this appears unlikely without change elsewhere.
Iran
What:
POGidC has been awarded a contract for the continued development of iran’s Yaran oil eld.
Why:
iran is taking steps to increase oil production amid hopes that sanctions will be eased.
What next:
sanctions are unlikely
to be lifted as long as President Trump remains in of ce.
THe National Iranian Oil Co. (NIOC) this week awarded a contract for the development of the Yaran oil eld to local rm Persia Oil and Gas Industry Development Co. (POGIDC).
e deal was signed by POGIDC CeO Jafar Hejazi and Deputy Petroleum Minister for engi- neering & Development A airs Reza Dehghan on behalf of NIOC during a ceremony on July 11 which was attended by Minister of Petro- leum Bijan Zangeneh. It follows an earlier heads of agreement (HoA) for studies for the eld’s development.
e 10-year contract is estimated to be worth $463mn, split nearly 50:50 between capital expenditures and operating costs to add around 11,000 bpd to production from Yaran. POGIDC is liable for all project-related expenses.
north and south
In 1Q2019, Petroleum engineering and Devel- opment Co. (PeDeC) brought six wells into pro- duction at South Yaran, increasing output from just over 10,000 bpd to an average of around 15,000 bpd, with some spikes in production to 20,000 bpd.
e original plan for South Yaran involved drilling30wellsthatwouldallowforupto60,000 bpd of oil to be produced.
However, PeDeC’s director of development at South Yaran, Homayoon Kazemeini Kaze- meini, cited drilling data pointing to the possi- bility that the Fahlyan layer of South Yaran had no production capacity. e target was therefore reduced to 25,000 bpd, with 21,000 bpd expected from the Sarvak layer and 4,000 bpd from the Gadvan layer. This target was later raised to 30,000 bpd, as more oil is anticipated from the Sarvak layer.
Combined reserves at North and South Yaran are estimated to be at least 2bn barrels of oil. Out- put from North Yaran is estimated at 30,000 bpd.
e North and South sites comprise the Ira- nian part of a wider formation that includes the Azadegan eld, which is shared with Iraq and tapped from both sides. In Iraq, it is known as Majnoon, Arabic for ‘insane’, a reference to the deposit’s conservatively estimated 38bn barrels of oil in place (OIP).
The Iranian fields form part of the West
Karoun oil eld cluster, which is also home to the Yadavaran oil eld.
POGIDC’s contract covers the drilling of six new wells – three at North Yaran and three at South Yaran, as well as one for appraisal and one for water injection.
e company will also carry out workover operations at five wells, provide electric sub- mersible pumps (eSPs) for 27 production wells in the Sarvak Layer, construct and upgrade ground facilities, conduct laboratory studies, and provide an enhanced oil recovery (eOR) solution.
NIOC anticipates that the project will gener- ate around $2bn of income.
output push
e drive to increase oil production comes as Tehran has voiced optimism about an easing of sanctions, without giving any timeline, nor evi- dence of such a move.
Zanganeh was quoted by Shana as saying: “It is true that our oil production has now decreased because of the unfair sanctions. But it will not remain like this forever. We should increase capacity so that anytime needed, we enter the marketwithfullforceandreviveourshare.”
Speaking during the Yaran contract cere- mony, the minister said that the POGIDC con- tract was a sign of things to come, stating that contracts for all of Iran’s shared border oil and gas elds would be formalised by the end of Has- san Rouhani’s presidential term in mid-2021. “I don’t say their development will [be] complete but all the elds will be decided under real con- tracts with capable companies,” he added.
NIOC’s managing director Masoud Karba- sian noted that discussions were ongoing for contracts pertaining to the Changuleh, Forou- zan, Reshadat and Sohrab oil elds, as well as for the oil layer of the supergiant South Pars gas eld.
He added that the shared Na Shahr oil eld is currently under development by the National Iranian Drilling Co. (NIDC).
This is good news for Iran’s numerous upstream development companies, which will continue to bid for the work without competi- tion from Western IOCs, which remain frozen out by US sanctions.
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w w w . N E W S B A S E . c o m Week 28 15•July•2020