13 July 2021 - 14:20
  • News Code: 318539
Petropars to Develop Farzad B

TEHRAN (Shana) -- On May 17, a $1.68 billion buyback agreement for development of the Farzad B gas field was signed between National Iranian Oil Company (NIOC) and Petropars Limited. The agreement was signed by Reza Dehqan, deputy CEO of NIOC for development and engineering, and Hamid-Reza Masoudi CEO of Petropars.

The agreement is aimed at achieving 28 mcm/d of sour gas over five years. As this agreement is signed, the case of all jointly owned fields is closed under the administration of Hassan Rouhani.

Minister of Petroleum Bijan Zangeneh has also said that under the Rouhani administration, gas recovery from the giant offshore South Pars gas field increased 2.5-fold, while oil production from West Karoun cluster of oil fields increased six-fold.

The gas recovered from the Farzad B field would be taken to onshore facilities in Pars 2 zone, where condensate would be separated from sour gas to be transferred to the refineries of SP12 and SP19. The gas emitted from the onshore facilities of Farzad B would be also distributed among the five refineries located in Pars 2 for processing.

The CEO of Pars Oil and Gas Company (POGC) says Farzad B holds about 23,000 bcf of gas in place and gas condensate of 5,000 barrels per each 1 bcf of gas.

Sanctions Scared Away India

Zangeneh said: “Farzad B gas field is among the fields whose contractual talks were under way with the Indians since long time ago. Iran was willing to award this development project to the Indians who planned to convert Farzad gas into LNG, but during the first round of sanctions they pulled out of this field. After the sanctions were removed, they returned. I personally talked with India’s oil and gas minister and other officials on development of this field, but they refused to come in. We even agreed to their conditions for not producing LNG, but they again refused to come because of sanctions and other issues.”

“NIOC has studied many scenarios for developing this field. Development of this field would cost as much as one South Pars phase, i.e. $2 billion,” he said.

“The gas condensate in the Farzad field equals one-eighth of South Pars. In fact, there is no balance between receipt and payment; and reimbursement for this project would be very difficult,” said the minister.

30 Scenarios

Zangeneh said nearly 30 scenarios had been studied for developing Farzad field in order to minimize costs.

“Finally, it was decided that the gas produced at this field be transferred to Site 2 of South Pars so that the facilities available at South Pars would be used. Currently, Site 2 of the South Pars has high capacity to receive gas,” he added.

Zangeneh said the project would now cost about $1.8 billion, adding: “Farzad B field would be developed under a buyback deal. We have been struggling with the problem of sanctions, finance and money shortage of National Development Fund of Iran (NDFI). But this project has been financed jointly by NDFI and bonds.”

Zangeneh said that a study entitled “Using Persian Gulf West Refineries” was carried out to show what kind of gas is transferred to these refineries. It became known that gas came from Belal and Kish.

Joint Fields Finalized

Zangeneh said the development contract for Farzad B gas field was the last one for the Petroleum Ministry with regard to developing shared gas fields.

“Of course, there is also Farzad A gas field, but whose gas production depends on development of Farzad B. To develop Farzad B, the complications of this field must be known precisely. Spending money is not the only tool for development. Rather, acting reasonably is important,” he said.

Zangeneh said he had kept his pledge to finalize the case of all fields shared with neighboring states.

“In South Pars, 95% of work pertaining to reservoirs has been done and the rest is related to maintenance of output and pressure compression, which would cost $ 20-30 billion. Its plan is now ready and the next administration has to deal with it,” he said.

The minister said that recovery from West Karoun fields grew six-fold from 70,000 b/d in 2013 to 420,000 b/d now.

“Gas recovery from South Pars has also increased 2.5-fold. The field is currently producing 700 mcm/d of gas. That is important. It is noteworthy that due to huge potential in the country, such things may not be repeated. A movement that had started under the reformist administration [of President Mohammad Khatami] was closed under this administration,” he said.

Zangeneh said maintaining the 700 mcm/d output from South Pars would require expertise, adding that the production capacity of South Pars was complete.

The minister said agreements for joint oil fields were signed during the time Iran was under sanctions.

“We did not sign just something for showoff, we have financed all of them,” he said, adding that an agreement would be signed soon for developing the giant Azadegan oil field. 

Noting that big efforts have been made in recent years to upgrade Iranian companies, Zangeneh said: “Thanks to God, they were upgraded and Petropars is now a source of national pride. We hope that this honor would go ahead for the entire country.”

No Obstacle to Foreigners

Asked why the petroleum ministry did not wait for the conclusion of ongoing nuclear talks in Vienna before signing agreement for Farzad B field, Zangeneh said: “That would have delayed our work. Even now there is no problem with partnering a foreign company. If willing, foreign companies may also join this agreement.”

When asked to comment about reports by foreign news agencies regarding Iran’s enhanced oil production and exports, he said: “I won’t talk about it.”

The minister also said that he would retire after his term ends in the Rouhani administration. He said he would no longer hold any government posts.

Finance Proportionate to Progress

Masoud Karbasian, CEO of National Iranian Oil Company (NIOC) offered a report on the final decision made for jointly owned fields. “The agreement signed for the development of Farzad B field was the last page in the file of joint gas fields in the country. Upon permission from the Economic Council for two oil fields in the near future, the case of joint oil fields would be also closed soon.”

He also said that Petropars had already signed a deal to develop Phase 11 of South Pars. He said that the necessary finance for Farzad B would be supplied by issuing bonds as the project would make progress.

Karbasian also said that the production capacity of joint oil fields had increased 5.7 times over the past eight years.

Farzad B Tougher than South Pars

Reza Dehqan, deputy CEO of NIOC for development and engineering, compared Farzad B with South Pars in terms of hardships, saying: “Development of Farzad B field would need more knowhow, technology and cutting edge equipment.”

He said the work would be tougher in Farzad B than in South Pars, adding: “The gas recovered from Farzad is dry. The temperature of this reservoir is 128 degrees Centigrade and its reservoir pressure is 9,000 psi, which is about twice that of South Pars.”

He added that the sulfur content of gas in Farzad B was eight times higher than that of South Pars.

According to Dehqan, Farzad B is located 230 kilometers away from onshore areas, i.e. twice the South Pars distance.   

He said such comparisons show that Farzad B is replete with complications and uncertainties, adding that drilling, extraction and transfer of gas onshore would require the toughest ever pipe-laying in the country.

“Naturally, under such conditions, development of this field would require sophisticated knowhow and technology in design and high-tech equipment and corrosion resistant alloys,” he added.

Asked why Petropars had been chosen as contractor in this project, he replied: “Owing to its successful presence in a similar field, i.e. South Pars, Petropars was seen as the best choice to develop Farzad B, and we hope it would prove to be successful in this field too.”

Signals from Foreign Firms

On the sidelines of the ceremony for signing the agreement, Dehqan told “Iran Petroleum”: “Over recent months, we have received signals from foreign companies for oil cooperation with Iran and even some of these companies said they would start cooperating with Iran once sanctions have been lifted.”

He said he would name foreign companies if sanctions on Iran’s petroleum industry would be lifted.

“They have expressed willingness to be involved in the fields for which agreements have already been signed and also for new fields. We have told foreign companies that they may partner Iranian companies in the fields for which agreements have already been signed,” said Dehqan.

He said that negotiations for developing some oil and gas fields were 99% complete before the US quit the Iran nuclear deal in 2018. “Therefore, I think that if sanctions are lifted and conditions become conducive to signing contracts, we may at least sign five new agreements by next March.”

Petropars Knows Farzad

Hamid-Reza Masoudi, CEO of Petropars, said that 38 scenarios had been examined for the development of Farzad B gas field whose pressure is high and whose geological structure is very complicated.

“This company has agreed to develop this field with full knowledge,” he said.

Masoudi said Farzad B held 29.3 tcf of gas in place, 23 tcf of which lying in Iran’s territory and the rest in Saudi Arabia’s territory.

“Petropars had already signed a heads of agreement with NIOC Directorate of Exploration and the Iranian Offshore Oil Company (IOOC) for exploration and development studies. That was done based on the contract provisions. Later on, some other important projects like 3D geomechnical studies were also assigned to it,” he said.

“For the first time, 3D geomechanical studies were carried out by Petropars in cooperation with Iranian universities. That is a source of honor for the oil and gas industry. We learned where we may start drilling to achieve the best result,” he added.

Hope for Lower Risk

Masoudi said Pars Oil and Gas Company (POGC) had assigned studies to Petropars under an MC framework. “Six major and 32 minor scenarios were designed for studying and developing hydrocarbon fields. Two top international companies cooperated with Petropars in studying Farzad B until the best scenario was chosen.”

He said serious risks would have emerged in case of any intervention without prior knowledge of the field. “Fortunately, Petropars has entered development with full knowledge. We hope that we could reduce risks and develop the field in the shortest possible time,” he added.

Courtesy of Iran Petroleum

News Code 318539

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