30 August 2021 - 17:26
  • News Code: 320344
Oil, Gas Development under Shadow of Sanctions

TEHRAN (Shana) -- The outstanding feature of the track record of the two administrations of outgoing President Hassan Rouhani would be sought in the development of joint oil and gas fields in South Pars and West Karoun. Under these two administrations, oil recovery from the fields jointly owned by Iran and Iraq in West Karoun grew five-fold, while South Pars saw its production increase three-fold over the same period.

National Iranian Oil Company (NIOC) has realized these figures in the past eight years despite restrictions caused by unilateral sanctions imposed on the country’s petroleum industry. However, had the US not imposed sanctions on Iran’s petroleum industry, oil and rate of gas recovery from joint fields would have been higher.

However, petroleum industry contractors and manufacturers were able to prevent any halt in the development of joint oil and gas fields, despite all the international constraints they faced. In the following report, we examine the performance of the two administrations of Rouhani in the development of joint oil and gas fields.

South Pars Development

South Pars, as the most important and largest project in the history of Iran’s petroleum industry, is the outcome of more than two decades of efforts made by the petroleum industry, and today, thanks to such efforts, the completion of projects related to the 28 phases of this joint field is in the final stage. Practical measures have been taken to create a daily production capacity of 1bcm/d of gas in the country in the near future.

It has been about 20 years since Iran started extracting gas from the South Pars field, and over this period, Iran's production from this joint reservoir has always increased. However, until a few years ago, this recovery was always less than Qatar. Qatar started producing gas from South Pars earlier than Iran. Iran, however, made the first gas production from this field in 2002 by developing phases 2 and 3, and output hike continued at a reasonable pacing.

The distance between Iranian and Qatari recovery widened in 2005 and afterwards. Qatar was increasing its own recovery by relying on foreign investment and technology, but Iran was lagging behind because of international sanctions. By 2008, Qatar’s recovery from South Pars was twice Iran’s.

In those years, Iran had defined 35-month phases, but in practice Iran's gas production was not increased. This production gap continued until 2013. Qatar, of course, kept its production levels constant in those years, and this led to a higher recovery than Iran. But as soon as the Rouhani administration took office, development of remaining South Pars phases picked up speed, bringing Iran’s gas recovery from South Pars to Qatar’s levees as SP12, SP15, SP16, SP17, SP18, SP19, SP20 and SP21 came online.

Gas recovery from the platform of SP18 began in June 2015. In November that year, the 17A platform became operational with a capacity of 10mcm/d. In March 2016, SP19 started producing 500 mcf/d of gas. In November that year, a 500mcf/d 18B platform came on-stream, setting a hookup and operation record.

In 2016, 28 mcm/d recovery of gas from the SP21 platform started.

In 2017, SP17, SP18, SP19, SP20 and SP21 came online to add 150 mcm/d to South Pars recovery. It was exactly when Iran reached Qatar in recovery from this giant offshore field.

In April 2018, the platform 14A came online, thereby allowing for sour gas recovery from the first platform of SP14. In November 2017, simultaneously with the end of operations for launching the 14C satellite platform in the Persian Gulf, sour gas recovery from the reservoir of the second gas platform of SP14 was started.

The first platform of SP22-24 phase development with a recovery capacity of 14.2 mcm/d of offshore gas was launched in 2018. In March 2019, the refinery of SP13 and SP22-24 came online for $11 billion. In 2019, platforms of 13A and 13C and the remaining two platforms of SP22-24 became operational.

In 2019, gas recovery from 14B started, and the last offshore platform of SP14 was loaded out. The satellite platform of 14D was installed on the jacket while some time later, associated structures were installed. The last platform of SP14 development became operational in March 2020.

In April 2020, development of SP11 began after the wellhead jacket was loaded out. The jacket was installed within a month. That marked the beginning of development of SP11. National Iranian Oil Company (NIOC) had earlier signed a deal with a Total-led consortium, but following the imposition of the US unilateral sanctions on Iran, the foreign parties to the agreement pulled out.

Development of the South Pars oil layer was one of the important programs of NIOC under the Rouhani administration. The first phase of this project came online in 2017, allowing for the recovery of 35,000 b/d of crude oil, which would earn Iran $510 million in annual revenue.  

West Karoun

Iran was just recovering 70,000 b/d from the cluster of oil field sin West Karoun in 2013. Now, this figure has jumped to 400,000 b/d. That has generated considerable wealth for Iran and let the country increase its share of recovery from the fields jointly owned by neighbors.

West Karoun fields are among the youngest oil fields in Iran. The five oil fields of North Azadegan, South Azadegan, North Yaran, South Yaran and Yadavaran totally hold 64 billion barrels of oil in place.

Therefore, efforts have got under way over recent years to increase oil extraction and boost the rate of recovery from these fields. In case Iran fails to recover oil based on its share, the Western neighbor will have enough time for recovery.

In the latest measure aimed at maximum recovery from West Karoun fields, an agreement was signed for the development of South Azadegan. Currently, the production capacity of South Azadegan stands at 140,000 b/d, which would increase to 320,000 b/d after development. In the second phase, South Azadegan would be producing 600,000 b/d. Therefore, more talks would be held with Iranian E&P companies. In order to build the central processing unit of South Azadegan, more than € 165 million worth of commodities; and Iranian contractors, manufacturers and suppliers have received order for equipment. Relying on its domestic capacity, Iran has managed to increase its recovery from the field it shares with Iraq. 

Local Firms Developing South Azadegan

The foreign contractor for the South Azadegan field was dismissed in 2014 due to repeated delays and disregarding the 90-day ultimatum set by NIOC. Then, the project was decided to be assigned to local firms. South Azadegan saw its production capacity more than triple in less than four years. Also, the prefabricated oil processing unit was put into operation at the same time the sanctions were being imposed, with private (foreign) investment, and by late 2019, both of its trains were fully operational. The South Azadegan field, which was one of the attractive fields for foreign investors, could not use the capital and technology of foreign companies due to sanctions. Therefore, NIOC decided to strike deals with Petroleum Engineering and Development Company (PEDEC) and Petropars for the construction of the CTEP processing plant. This agreement was aimed at increasing the production capacity of the field to 320,000 b/d within 30 months. It was worth $961 million plus IRR 11,830 billion.

Yaran Field

The North and South Yaran fields are also joint fields in West Karoun. The oil production capacity of these fields is not as much as that of Azadegan and Yadavaran. However, Iran prioritized their development because of sharing them with Iraq. The local firm Persia Oil and Gas Industry Development Company (POGIDC) developed North Yaran whose production capacity reached 30,000 b/d in November 2016. South Yaran was finally developed by PEDEC and saw its output reach 25,000 b/d after a mobile oil separator (MOS) was installed there. It was the first time a domestically produced MOS was being installed in West Karoun.

Finally, POGIDC signed an IPC deal in July 2020 to develop Yaran. This agreement aims the accumulated production of 39.5 million barrels over 10 years. The direct CAPEX is estimated at $227 million. The operation costs are estimated to be $236 million.

Yadavaran Field

Trial operation started from Yadavaran in early 2016. In November that year, the field came online with a production capacity of 85,000 b/d. Production from this field has since been growing relentlessly and has even exceeded its nominal capacity. The technological development of this field has been assigned to the Petroleum Engineering Institute of the University of Tehran and enhanced recovery studies are under way there.

Yadavaran is among attractive fields for development. Sanctions forced NIOC to turn to local firms for its development. Talks are currently under way for the second phase development of this oil field.

Sophisticated Azar Field

The first phase of early production from the shared Azar field started in March 2017 with a capacity of 15,000 b/d. PEDEC announced in 2017 that Azar’s production capacity had increased to 30,000 b/d. The central processing unit of the field was completed in July 2020 while for the first time an MPFM was installed there. Azar is one of the most complicated fields in Iran. This field had been developed 6% in 2013. It came online in March 2021 with a production capacity of 65,000 b/d.

Aban, West Paydar

Two wells drilled at the Aban field became operational in 2015, increasing the field’s production capacity. In the West Paydar field, the 20,000 b/d recovery recorded in 2012 increased to 30,000 b/d in 2016. In March 2018, an agreement was signed for the development of the Aban and West Paydar fields between NIOC and a consortium of Iran’s Dana Energy and Russia’s Zarubezhneft. Development of Sohrab field was also finalized after an IPC agreement was signed with Dana Energy.

As part of its oil production capacity enhancement, NIOC signed 10 agreements with local firms, one of which was related the Naftshahr oil field. Development of Naftshahr began in 2019 and this project is under way after the drilling of one new well and workover of three existing wells with $30 million.

According to the Iranian Central Oil Fields Company (ICOFC), in light of the existing processing capacity of the Naftshahr production/desalination unit, with a view to making optimal use of these facilities and regional prosperity, development of adjoining fields including Soumar, Salman and Delavaran was also envisaged.

Gas Injection into Salman

Salman field witnessed an increase in production in 2015, and the daily oil production of this field, which at that time hosted the simultaneous operation of three drilling rigs, increased by more than 10,000 barrels. Doubling the amount of gas injected into the wells of this field played a significant role in enhancing the recovery factor and increasing its oil production.

By March 2020, the wellhead S1 platform of the Salman field, which was domestically built, was installed and launched 6 months later. The construction of this platform started in 2014 by an Iranian private company. After the installation and commissioning of the S1 platform and the operation of wells No. 61 and 64 of the Salman joint field, the completion and reclamation of the two wells 62 and 63 and the removal of production barriers were also on the agenda. Their oil production was stabilized thanks to artificial lifting by gas.

Forouzan Platforms

The year 2015 was a turning point in the implementation of the project for the construction of platforms for the Forouzan joint oil field by the Iranian Offshore Engineering and Construction Company (IOEC). In that year, construction of these platforms progressed by 34%. In 2017, the jacket of the F18 platform of the Forouzan joint field was installed and the control system of the oil platform of this joint field was designed, programmed, installed and commissioned based on one of the most advanced systems in the world oil and gas industry.

The plan to maintain and enhance oil production in Forouzan field was handed over by the Iranian Offshore Oil Company (IOOC) as the client in the form of an EPC-EPD contract to a consortium consisting of Petropars and Iran Shipbuilding and Offshore Industries Complex (ISOICO), led by Petropars.

Belal Development Decided

In 2019, a contract for the development of the Belal joint gas field was signed with the Iranian company Petropars.

In June 2021, NIOC took an operational step in using nanofluids in the implementation of enhanced oil recovery (EOR) methods with nanofluid injection into the Surmeh reservoir of the Belal field; an operation which aims to increase oil recovery and which is being done for the first time in the country.

In the first step, the objective is to inject 18,000 barrels of nanofluids into Well No. 10 of the Belal field. After examining the feasibility of injectability of nanofluids as one of the new methods to enhance the oil recovery factor, the technical knowhow for producing suitable nanostructures (nanoemulsions) has been acquired in order to facilitate the oil recovery. The project was first assigned to RIPI in 2015. NIOC Directorate of Research and Technology is steering the project.

In the first phase of this project, the formulation and technical knowhow of using nanoparticles to prepare stable emulsions at laboratory scale were designed and in the second phase, the simulation of injection of selected nanofluid into the Sourmeh reservoir of the Belal field was on the agenda. The third phase of the project was dedicated to the preparation of selected nanofluids on semi-industrial scale for enhanced recovery tests for injection into this reservoir, and in the fourth phase, single-scale operations began in one of the injection wells in the Belal field.

Farzad B Development

On 17 May 2021, a $1.68 billion buyback agreement for development of the Farzad B gas field was signed between NIOC and Petropars Limited.

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.

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 for processing between the five refineries located in Pars 2.

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

Courtesy of Iran Petroleum

News Code 320344

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