Currently, Russia’s Gazprom, Malaysia’s Petronas, a South Korean company and a Turkish company are working on the Iraqi side of the reservoir (known there as Badra). On the Iran side, contractors are working alongside foreign contractors. Iran is close to Iraq in terms of development of the field which has 2.5 billion barrels of oil in place.

The first well in Azar was drilled by Hydro Zagros up to the depth of 4,900 meters at Kajdomi Formation. Then, negotiations were held with this company for two years up to 2008, but they ended inconclusively. Since the field was shared with Iraq, National Iranian Oil Company (NIOC) Board of Directors decided in September 2008 to assign the development of the field to Petroleum Engineering and Development Company (PEDEC).

However, NIOC changed strategy for financing the project. It held talks with Gazprom and Petronas in 2009 and 2010 and a master development plan (MDP) was finalized for the field. But due to international conditions, no agreement was finalized. Then, negotiations were held with a consortium of Oil Industries Engineering and Construction Company (OIEC) and Sepehr Energy. Bank Saderat was initially to finance the project, but it pulled out. Then, talks were held again with OIEC and Oil Industry Pension Fund Investment Company (OPIC), which resulted in a $1.9 billion buyback deal in October 2011. The project did not go ahead as planned,due to special drilling conditions in the field and insufficient financial resources.

Finally, as instructed by the minister of petroleum in 2014, the number of drilling rigs increased to 7. Production from this field reached 30,000 b/d in 2017. It currently stands at 65,000 b/d, which is very decisive in competition with Iraq. Nineteen wells have been drilled in Azar. Two were drilled by Persia Oil And Gas Industry Development Co., seven by National Iranian Drilling Company and 10 by Global Petro Tech Kish Company.

Petroleum industry expert say in Iran working conditions and geological data of each field are specific. For instance, one cannot compare drilling in Azar with drilling in the Azadegan oil field. In their view, drilling in Azadegan is like driving in a freeway because geological data would allow safe drilling with minimum risks. But drilling in Azar is like driving in a rugged and mountainous road because of poor available data. The geologically complicated data of these fields pose a major challenge. These realities exist in the Azar field development. The first well of this field started production in early 2015.

Oil Production Test

Gholam-Reza Manouchehri, CEO of OIEC, recently said the crude oil production tests in Azar had been done successfully.

“In light of 97% progress in development of this joint field, the first phase is in the stage of operation and will become operational soon. In buyback deals, once the activities are completed, the contractor is required to put all wells and facilities in the state of production for 21 days,” he said, adding that the Azar field had started supplying 65,000 b/d of crude oil. 

Azar’s development is estimated to cost €1.4 billion, provided by National Development Fund of Iran (NDFI) and bank loans.

Under OIEC management, Sarvak Azar Engineering and Development Co. managed to carry out the performance test of this project despite sanctions, financing restrictions and difficulty in equipment supply. The oil produced at this field has been supplied to Cheshmeh Khosh production installations.

The significance of operation of Azar is that it is the first investment project by OPIC and “Ahdaf Investment Company” in the upstream sector.

The Azar development’s 32 sub-projects include 10 surface and 22 subsurface projects.

Drilling Record Set in Azar

The share of domestic manufacturing in the Azar oil field development was 75% with local residents constituting 55% of manpower. In this project, 70 million persons-hours of nonstop work had been done without any accident. Despite all geological complications and difficulties, it is the first buyback agreement that has become fully operational by Iranian experts. Drilling was high-risk and challenging. The average time spent on drilling was 550 days, which has now been reduced to 300. OIEC now can use the experience it gained in developing the Azar field in developing the Changouleh field.

Because production from Azar is through a central processing facility, it has started production at the rate of 71,500 b/d.

A major challenge with drilling in Azar is dependence on hydraulic fracturing. To resolve this problem, acid fracturing would be used.

Azar lies in the Anaran block located between the cities of Mehran and Dehloran.

By Javad Asghari

Courtesy of Iran Petroleum