Page 5 - MEOG Week 37 2022

MEOG COMMENTARY MEOG

190,000 bpd, suggesting that North Azadegan’s 150-km pipeline to transport seawater from the
production has been constrained. Gulf, which will presumably also necessitate the
While the Ministry of Petroleum (MoP) had addition of seawater processing facilities.
previously set a target of 320,000 bpd for the first
phase of South Azadegan by March 2023, with a Project oversight
second development phase seen adding another The financiers and field developers are expected
280,000 bpd, NIOC’s director of corporate plan- to form a joint venture company to oversee the
ning Karim Zobeidi said in May that output field expansion project. They will establish the
from the two fields would reach 220,000 bpd by Azadegan Exploration and Production Co.
that date. The latter figure was reiterated in this (AEPCO), with the six banks taking an 80%
week’s announcement. share and the E&P firms sharing the remainder.
Khojastehmehr said that the financing would It is through this vehicle that the banks will
cover plans to expand total output to 570,000 invest the $7bn of funds over the next seven
bpd, though Minister of Petroleum Javad Owji years. AEPCO will manage Azadegan under
noted: “As an expert in oil and gas reservoirs, I the integrated petroleum contract (IPC) model,
say that, considering the high capacity of this which was prepared to attract foreign companies
field, it is realistic to expect a production level as an improvement on the old buyback model.
of over 590,000 bpd from this field.” This figure The banks will begin to receive payments
has not been mentioned elsewhere, though is from the second year of work and this will be
broadly in line with the original target for the “in proportion to the level of development and
field. production”, according to the MoP’s Shana news
NIOC’s subsidiary’s responsible for the field, network.
Petroleum Engineering and Development Co. Meanwhile, the MoP has previously said
(PEDEC) and Petropars, kicked off a 10-well that it plans to attract around $4.5bn in foreign
drilling campaign at South Azadegan in March. capital – in addition to the $7bn of local funds –
North Azadegan is further behind in its once sanctions are removed in two investment
development, having entered production in packages, akin to what was being offered before
2016. Trump-era sanctions in 2018.
With oil at $80 per barrel, Owji said that Aza- “Two attractive investment packages in the
degan’s development would be worth around upstream and downstream sectors have been
$115bn to Iran over the next 20 years. He noted prepared for foreign investors, which we hope
that the field’s integrated development would will lead to a contract soon,” it said earlier in
require the drilling of more than 420 production the year. However, with the future of negotia-
and injection wells, the construction of five man- tions between Iran and international powers
ifolds and the laying of 315,000-320,000 km of uncertain to say the least, there is reason to
pipelines, with the required equipment to be pro- doubt whether this extra funding will ever be
vided by local contractors and manufacturers. forthcoming.
With such low rates of recovery, Iran intends For Tehran, though, it is hard to overstate
to utilise enhanced recovery methods at the Azadegan’s importance to the country’s over-
field, and Owji noted that 187 of the 420 wells all oil expansion plans. Were it to achieve the
are expected to be used for water injection. expanded target of 570,000 bpd, Azadegan
As in southern Iraq, where the supply of would account for 10% of the planned output
water is used to maintain and increase reservoir capacity of 5.7mn bpd by 2030, up from the cur-
pressure, this will require the construction of a rent level of 3.8mn bpd.™

Week 37 14•September•2022 www. NEWSBASE .com P5