SHANA - The second international E&P conference and the first international drilling industry exhibition were held simultaneously in Tehran March 3-4. More than 170 Iranian and foreign speakers shared views through 24 panel discussions.

 

Models of upstream petroleum industry contracts, challenges to investment and financing upstream projects and geostrategic aspects of Iran's oil gas industry, management of oil and gas projects and optimization of drilling operations and bolstering drilling services were among main topics discussed by experts from all around the world.

CEO of the National Iranian Oil Company Ali Kardor, in opening remarks to the high-profile event, said a tender bid was planned to be held for the development of North Azadegan oil field in southwestern Iran.

"Ten technical groups have been involved in the negotiations about Iran's new oil contracts. We have been slow in this regard, but we hope to sign several agreements in the new calendar year which started on March 21", Kardor said.

He highlighted the NIOC's policy of outsourcing and monitoring role, saying: "Such policies as the awarding of NGL, electricity generation, and water desalination projects will continue."

Kardor revealed that the tender bid for the North Azadegan field would be in line with the policy of outsourcing, saying: "The agreement in effect is short-term, but a longer-term plan is on the agenda."

He also announced plans for establishing a project fund to finance oil production and preservation projects. "Selling unit shares and bonds and financing by tapping the National Development Fund of Iran (NDFI) are among options for financing these projects," said Kardor.

"Ordinary people can buy unit shares to invest in [project] funds, while EPC and E&P companies may allocate fund to buying unit shares," he added.

Kardor referred to plans for selling bonds, saying: "Arrangements have been made to fully hedge risks of foreign exchange rate fluctuations."

Iran Petrodollars Paid

Iran's deputy minister of petroleum for international affairs and commerce, Amir-Hossein Zamani-Nia, told the inaugural that Iran had managed to receive its oil money in the aftermath of the implementation of its historic nuclear agreement with six world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA).

"Domestic investment in petroleum industry and foreign investment are interdependent and Iran's private sector should become active in terms of investment in oil industry," he said.

Noting that Iran's petroleum industry became independent and made progress following the 1979 Islamic Revolution, Zamani-Nia said: "Iran's oil production is not on part with the level of its reserves, which has politically motivated reasons."

He said that the JCPOA resolved some challenges of Iran's petroleum industry, specifically selling crude oil.

"We are now receiving our oil revenue," he said, adding that another achievement of the JCPOA was the facilitation of purchasing equipment for the petroleum industry.

Zamani-Nia said there were still some banking problems which were not related to the JCPOA. "They are related to other issues whose resolution would help the petroleum industry experience dynamism."

Iran Oil Output Set to Rise

For his part, Deputy CEO of NIOC Gholam-Reza Manouchehri said Iran's oil production capacity would increase by 150,000 b/d after the implementation of the three draft agreements referred to by Kardor.

Speaking on the sidelines of the conference, Manouchehri, who handles development and engineering affairs at NIOC, said: "The studies conducted on Iranian fields show that recovery from these reservoirs could be raised by 10%."

Qualified Companies Assessment

Iran's deputy petroleum minister for research and technology, Habibollah Bitaraf, touched on the Ministry of Petroleum's plans for developing oil and gas fields under Engineering, Procurement, and Construction (EPC) contracts, saying: "Using domestic potential and transfer of technology for the implementation of these plans are underscored. To that end, we can benefit from the services of domestic and foreign E&P companies."

In the EPC contracts, the agreement is signed between the NIOC on one side and domestic and foreign companies on the other, Bitaraf said, adding that the share of each company in the project would depend on its capabilities.

According to Bitaraf, Iranian companies and their foreign partners would have to respect certain obligations with regard to the purchase of commodities and equipment and domestic manufacturing unless domestic manufacturing of items and equipment turns out to be impossible.

"At all levels envisaged for domestic and foreign companies, the issue of transfer of technology is highlighted by both the Iranian and foreign sides and this issue is among the major considerations of these contracts," he said.

Bitaraf said another development plan by the Ministry of Petroleum was to renovate equipment for the upstream sector.

"Most of our equipment is aged over 50, causing many challenges to the preservation of the current level of output. For this sector, we have made necessary multi-phase arrangements with focus upon utilizing domestic potential and supporting and bolstering domestic potentialities," he added.

Bitaraf said conducting comprehensive on oil and gas fields was another development plan by the Iranian Ministry of Petroleum, adding: "These studies have been assigned to ranked companies and consultants to handle the process of studying new fields and reservoirs by applying new technologies."

He referred to assessment made by qualified companies for enhanced recovery within the framework of EPC contracts, saying: "Furthermore within the framework of these projects, 30 projects worth around $6 billion are envisaged to be outsourced within the framework of three contracts worth $50 to $300 million.

The two-day event was attended by representatives of prominent oil companies that are examining opportunities for investment in Iran's petroleum industry.

In the following pages, the main panel discussions will be briefly reviewed.