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Iran announces South Pars gas field deal with foreign firm
last year.
Meanwhile, Iran is expanding the range of blendstock deliveries to Venezuela. Citing data from the oil analytics firm Vortexa, Argus Media reported last week that the Iranian tanker Dino was expected to discharge 370,000 barrels of Iranian Heavy crude at Venezuela’s Jose terminal soon. This grade, which has a specific gravity of 29.5 degrees API, is a lighter alternative to Venezuelan’s Merey grade, which has a specific gravity of 16.2 degrees API.
The recent uptick in Iranian shipments to Venezuela is happening as Chinese demand for Iranian crude slips as a consequence of lockdowns related to coronavirus (COVID-19). This drop in demand has freed up Iranian inventory, and much of this has been rerouted to Venezuela instead. Whether this ramped up supply will persist in the future remains to be seen, though.
As the main purchaser of both Iranian and Venezuelan crude exports, China has significant leverage over both nations’ export plans. Meanwhile, as Argus noted, there is another factor in play – the availability of extra cargoes from Russia, which is another major supply source for the Chinese market. In the event that Chinese buyers opt to purchase Russian Urals crude that has been heavily discounted because of Western sanctions, Iranian and Venezuelan exports to China could decline.
The National Iranian Oil Co. (NIOC) this week confirmed the signing of an investment deal with a foreign company for the development of the oil layer of the supergiant South Pars gas field.
A statement from NIOC’s manager for investment and business affairs, Fereydoun Kord-Zanganeh, said that a $530mn agreement had been struck during the previous Iranian calendar year, which ended on March 22, though it noted that the details of the deal remain confidential.
The Islamic Republic has expanded gas output significantly at South Pars in recent years and supplies are estimated to flow at an average of 850-950mn cubic metres per day, topping out at 1bn cubic metres. Last year, NIOC announced $70bn plans to expand production capacity to 1.5 bcm per day by 2030. Announcing the South Pars Oil Layer (SPOL) deal, Kord-Zanganeh said: “We are pursuing the exploration of oil layers in the oilfield as well.”
In mid-March, NIOC said it had signed a 20-year contract to leverage enhanced oil recovery (EOR) techniques for the second phase of development of SPOL to increase output, though Kord-Zanganeh said it had not been covered by the press owing to ongoing sanctions on Iran.
However, Middle East Oil & Gas (MEOG, Week 11) quoted NIOC CEO Mohsen Khojasteh-Mehr as saying: “For the first time, horizontal drilling with new foreign technologies and water injection will be used as one of the methods of production enhancement.”
He added: “The situation of the South Pars oil layers is such that we cannot exploit them by conventional drilling that we have in the country; therefore this is one of the special advantages of this contract that in addition to foreign investment, technology transfer will also be made possible.”
The foreign firm will partner NIOC subsidiary Iranian Offshore Engineering and Construction Co. (IOECC) to update reservoir models, upgrade and modify existing facilities, overhaul existing well and drill new wells for appraisal, production and water injection.
Located 130 km off Iran’s southern coast in 67 metres of water, the oil layer has an estimated 7bn barrels of oil in place (OIP), 900mn barrels of which are seen as recoverable, with first phase production reaching 25,000 barrels per day and the second phase seen raising this to 55,000-60,000 bpd.
The South Pars deposit, which Iran shares with Qatar, covers an area of 9,700 square km, with Iran’s 3,700-square km portion holding around 14 trillion cubic
50 IRAN Country Report June 2022 www.intellinews.com