OSJ On Line_| Martyn Wingrove: Shell and Total have signed agreements to invest in gas resources offshore Iran, as Saudi Aramco looks to rejuvenate Persian Gulf fields.
Iran will be a key focus area in 2017 as energy companies begin to sign contracts and explore offshore developments. Some of the largest offshore investments in the Middle East will be focused on Iranian projects, although there will also be plenty of expenditure in Saudi Arabia.
Royal Dutch Shell was the latest oil major to return to Iran in 2016. It signed agreements to consider developing the Kish gas field in the Persian Gulf and the Azadegan and Yadavaran onshore oil. It will be working with the National Iranian Oil Co (NIOC) on these projects if the existing memorandum of understanding turns into contracts.
Iran is focusing on increasing production of offshore gas by attracting foreign investment. Another of these offshore gas opportunities was gobbled up by Total and Chinese National Petroleum Co (CNPC), which recently reached a non-binding US$4.8 billion agreement to develop another section of the South Pars gas field. Together, they will be investing in offshore platforms, wells and pipelines in the South Pars 11 project in the coming years. Total will have a 50 per cent stake in this project, while NIOC subsidiary Petropars will have 20 per cent and CNPC will have 30 per cent.
In 2017, the project partners will negotiate a 20-year contract while Total will begin engineering studies and commence the tendering process so that construction contracts can be awarded immediately upon signature of the final agreement. Total expects the project will be developed in two phases. The first US$2 billion phase is expected to consist of 30 wells and two wellhead platforms connected to existing onshore treatment facilities by two subsea pipelines. A second investment phase could involve construction of offshore compression facilities when they are required. All this investment will require vessels to support offshore drilling, construction work and pipelay.
Across the Arabian Gulf, Saudi Arabia and Kuwait are expected to resume operations on the Khafji oil field that lies offshore of the neutral zone between the two countries. The field was shut down in October 2014 for environmental and probably political reasons but is likely to be restarted in the first or second quarter of 2017. It is operated by Al-Khafji Joint Operations Co, a joint venture between Kuwait Gulf Oil and a subsidiary of Saudi Aramco. Renewed operations would require drilling and well intervention services and support vessels.
Saudi Aramco has its own projects offshore Saudi Arabia. It is renewing facilities and adding new infrastructure in the Marjan, Zuluf and Safaniya oil fields. During the fourth quarter of 2016, it signed US$1 billion of contracts with Saipem for offshore engineering, procurement, construction and installation work. This includes installing subsea systems, laying pipelines, subsea cables and umbilicals and installing platform jackets and decks as Saudi Arabia renews these ageing fields. It also includes maintenance and dismantling work on the existing platforms.
McDermott is also working with Saudi Aramco on offshore projects. It opened an office in Al Khobar, Saudi Arabia, for its 300 staff working in the country. Shipowners are sending more support vessels to Saudi Arabia to begin long-term contracts. PACC Offshore Services Holdings (POSH) has mobilised the anchor handler POSH Raptor to Saudi Arabia following delivery from PaxOcean Engineering Zhuhai shipyard in China. The 8,000 bhp, 70m vessel is due to begin a long-term charter with Saudi Aramco.
Brokers also reported that Abu Dhabi National Oil Co subsidiary Esnaad has taken delivery of another platform supply vessel from De Hoop Shipyards in The Netherlands. Esnaad 228, a 65m vessel with 475m² of deck space, is the eighth of 10 vessels ordered by Esnaad to update and expand its fleet.