Azadegan Oilfield Deal to Be Signed in Six Months

"A deal to develop Azadegan Oilfield will certainly be signed by the end of this fiscal year (on March 20)," said Noureddine Shahnazizadeh, chief executive officer of Iran's Petroleum Engineering and Development Company (PEDEC) that oversees the development of some of the biggest Iranian oilfields, the company's website reported on Monday.

The Azadegan field, stretching over an area of 20 kilometers at the Iran-Iraq border, contains an estimated 33 billion barrels of crude, making it one of the largest and most attractive development projects for international oil majors.

Divided into the northern and southern sections, Azadegan is the biggest piece in an oil block known as West Karoun in Khuzestan Province that also includes Azadegan, Yaran, Yadavaran and Darkhoveyn fields, holding an estimated 67 billion barrels of oil in place.

"The representatives of 14 foreign companies have toured the infrastructure and facilities of the West Karoun block in two days," Shahnazizadeh said without specifying the time of the visit.

"They are given time to choose their partners and come up with a technical proposal to develop the Azadegan field," he added.

High-profile oil companies, including France's Total, Japan's Inpex and Malaysia's Petronas have conducted surveys on Azadegan and presented their respective development plans in the first half of the year.

Tehran has decided to award the development rights of Azadegan to a consortium instead of a single contractor. The decision comes amid the interest of other big names including Italian oil and gas major Eni, China National Petroleum Corp and Royal Dutch Shell in the prized crude oil deposit.

"Production at Azadegan is more than 80,000 barrels per day now from 45,000 barrels last year," the PEDEC chief said.

Plans are in place to ramp up production to more than 140,000 bpd by March, initially by 25,000 bpd and by 40,000 barrels a day in the second step, before handing out the oilfield to an international consortium in about six months from now.

More IPC Deals

Officials say the field will be tendered within the framework of Iran Petroleum Contract, the new style of contracts for oil and natural gas fields. Iran signed its first IPC contract outside of a tender process in July, delegating a $5-billion offshore gas project to Total.

Shahnazizadeh said last month that $2.2 billion have been spent on the northern part. Total revenues from North Azadegan have exceeded $1.5 billion. On the southern sections, he added that it has generated $1.2 billion in revenues since the start of production.

Shahnazizadeh underlined Yaran oilfield as another important development deal that will be finalized by March. Yaran field, about 130 kilometers west of Ahvaz, holds an estimated 2 billion barrels of in-place crude. Production from the field is reportedly at a rate of 115,000 barrels daily. Similar to Azadegan, Yadavaran is divided into two sections, but PEDEC is looking at a single master plan for parts. Persia Oil And Gas Industry Development Company will likely undertake the Yaran project, Shahnazizadeh noted.