The following is the full text of the interview he gave to “Iran Petroleum”:

Hydrocarbon resources and exploration of oil and gas reserves in the Caspian Sea are paid less attention than the resources in southern Iran. Could you tell us first about the history of studies and exploration operations in the Caspian Sea and KEPCO’s responsibility?

KEPCO is a subsidiary of National Iranian Oil Co. (NIOC), which was established in late 1990s. Two major studies were defined since the establishment of this company. As the first step in the Caspian Sea energy sector was taken with the establishment of this company, it was necessary first to begin exploration activities. Alongside these exploration activities, some seismic and drilling data was purchased from neighboring countries. Therefore, 28 and 35 prioritized hydrocarbon structures were identified in two phases, the AKSSDU was built and supporting vessels were installed on the Sardar-e-Jangal structure at the depth of about 700 meters, and two wells were spudded to facilitate access to oil in the Iranian portion of the Caspian Sea. KEPCO’s geographical domain of action covers the southern part of the Caspian Sea and the three northern provinces of Gilan, Mazandaran and Golestan. KEPCO is tasked with exploration, development, production, storage, processing and transfer of crude oil and gas. Of course, in the years leading to the Islamic Revolution, some seismic tests had been implemented and some wells drilled. There were also portions where no 2D seismic testing had been done, which were completed by the NIOC Directorate of Exploration. All this old information and whatever achieved in new seismic testing was compiled by the South Caspian Study Group (SCSG). The study group comprised an international consortium. Based on the results of these studies, 28 potential structures were identified. In the following years, these studies were completed and their data updated, leading finally to the identification of 35 hydrocarbon structures in South Caspian. Based on these studies, exploration, development and production structures were prioritized. Since based on the said studies, the bulk of exploration potential of hydrocarbon resources was identified in the deeper parts of South Caspian, construction of a semi-submersible platform started, which was completed in late 1990s. A decade later, the AKSSDU was built in Sadra Yard. Three Caspian vessels were tasked with supporting this platform. In late 1990s, the AKSSDU was installed on the Sardar-e Jangal structure and two wells were drilled. In the end, oil was struck in the Caspian Sea for the first time, after which it became clear there was greater potential for development and production in this sector. 3D seismic testing was considered in four blocks.

After initial exploration, what plans did KEPCO envisage?

Identifying prioritized structures of the Caspian Sea and planning for continued drilling in them were among plans that were developed in the wake of initial exploration. Furthermore, seismic plans were drawn up for some portions of South Caspian, which we had information about. The Block 13 of South Caspian is a case in point. That led to onshore seismic operations east of the Caspian Sea, as well as the shallow and TZ zone bordering Golestan Province. In parallel with these measures, we started work in the shallow portion, too. An agreement had been signed with NDC for drilling an exploration well in Block 18. A drilling rig was installed in the Roudsar structure. After a 28-year hiatus, drilling resumed in the shallow portion of the Caspian Sea. Roudsar was one of the 28 and 35 structures identified previously. In parallel with drilling in shallow waters, we focused on the deep portion. As a semi-submersible platform had remained non-operational since 2016, it needed overhaul. We handled its overhaul and we hope to resume exploration operations in the deep portions after overhaul.

What has been the result of activity in the shallow portion of the Caspian Sea?

Over recent years, wells had been spudded in the shallow portion of the Caspian Sea, the last of which dating from 28 years. Finally, after a 28-year hiatus in drilling in the shallow portion of the Caspian Sea, NDC’s Sea Breeze 1 drilling rig was installed on the Roudsar structure in coincidence with the 29th Tehran Oil Show, and drilling began. We are currently waiting for the results of this exploration well to see if they have been successful. The following drillings aimed at development and production would continue in this structure.

Given the resumption of exploration in the Caspian Sea, what are the prioritized projects and the vision of the company for the upcoming five years?

Most structures had undergone only 2D seismic testing, full data was not available about the drilled wells in neighboring countries, and necessary exploration wells had been spudded in the South Caspian structures, the studies conducted in the Caspian Sea are of low certainty. However, what has been achieved from the studies indicates that a massive volume of hydrocarbon reserves may exist in the Caspian Sea structures. As in the Sardar-e Jangal field, the existence of oil with an API gravity of 39 has been proven, it seems that based on our data, we may proceed with exploration work in the remaining structures and add to the hydrocarbon reserves in place, as well as recoverable hydrocarbons. One of our priorities over five years would be to repair the AKSSDU, without which nothing can be done in the Caspian Sea. Therefore, it is necessary to finish overhauling this platform so that by drilling exploration wells the status of a number of deep structures of the Caspian Sea would be decided. 3D seismic testing has been suggested for some of these structures, which we are trying to bring to conclusion in the deep portion to complete available information and reduce uncertainties. In the shallow portion, continued activities depend on the results of exploration wells in Roudsar. We are currently at the end of the Block 13 seismic testing project, i.e. data processing. Therefore, based on the results of this seismic testing, if any structure is identified in the shallow portion of the Caspian Sea, we can make plannings for onshore drilling or drilling in the shallow portion of this block.

How is the AKSSDU overhaul planned?

To overhaul the AKSSDU, 15 packages have been defined and presented. We have received proposals, based on which we are gradually assigning them in various sectors to be able to push ahead with overhaul within the timeframe. After bringing the AKSSDU online, we can concentrate on the prioritized structures of the deep portion of the Caspian Sea and resumption of exploration operations in this sector.

Can you explain us the latest measures taken in the Sardar-e Jangal field and exploration blocks?

In the Sardar-e Jangal field, some opportunities have been highlighted for development. We also need complementary data like long-term test of drilled wells, as well as drilling to explore deeper reservoirs in this field, which lies within the framework of our five-year plan. In other exploration blocks, all our activities in the deep portion depend on overhauling the AKSSDU. In the shallow portion the Roudsar, an exploration well is being drilled. After the end of drilling and conducting tests, we can express our views on this structure. In other blocks of the shallow portion, seismic testing projects are under way, the results of which can help identify new structures. As it was said, for the purpose of completing information and reducing uncertainties on current seismic data, 3D seismic operations have been envisaged in some of Caspian Sea blocks, which is noted in the five-year plan of KEPCO.

Apart from what has been clearly said, what is your specific plan for production from the hydrocarbon fields discovered in South Capsian?

Exploration, development and operation in the deep portion of the Caspian Sea require high investment and sophisticated technology. We are trying to attract investment in development. For instance, development of the Sardar-e Jangal field is estimated to need $7 billion in investment. Since this field was introduced to the NIOC Investment Opportunities Seminar, we hope that local investors and international companies would express their readiness for developing this field.

What are your plans to transform KEPCO into an energy hub in northern Iran?

When we talk about an energy hub, it means that pieces of a puzzle should be placed together to reach the final form. If we can embark on development and production in this sector, we can undoubtedly set up a hub. If we take into consideration gas imports or exports, it partly pertains to oil or gas production and partly to gas imports from neighboring nations. All these issues are not in control of KEPCO. However, what is clear is that if we can move toward production in the Caspian Sea, particularly gas production, we may take effective steps in supplying gas to Northern provinces that experienced pressure fall-off during peak consumption. As far as the deep portion is concerned, we need to attract technology and investment, after which we would decide on storage and transmission of oil and gas from this portion based on plans. It is noteworthy that Iran has good infrastructure for transmitting crude oil and petroleum products. We may benefit from this capacity to expand cooperation with neighbors of Iran in the Caspian Sea.

Is KEPCO self-reliant in terms of manufacturing specific equipment for the deep portion of the sea or does it need international cooperation?

Currently, we are currently using some equipment and drilling tools supplied by domestic companies for deep waters. For instance, in previous drillings, we concluded that the drilling mud used in South Caspian should be different from others. That is why we drew up a project last calendar year to adapt the drilling mud with the geological layers of South Caspian. We also focused on adaptation of drilling bits. There is also equipment that we may replace with local products, including pumps or diesel. However, generally speaking, I would like to note that Iran’s onshore drilling industry has more than 100 years of experience. We have also more than 50 years of experience in shallow-water drilling of the Persian Gulf. The maximum depth of water in these operational zones reaches 90 meters. But in the Casian Sea, the wells drilled in Sardar-e Jangal are 600-700 meters deep. Therefore, we needed specific equipment that we could not manufacture before. Therefore, the main sections of the semi-submersible platform construction in Sadra Yard were done with items mainly imported from abroad. What mattered was to be able to use equipment in the country. However, after some time, in terms of development and control of semi-submersible platforms, we made achievements to get local companies manufacture some parts. The key point is that we should expand our activities in the Caspian Sea and move on a broader basis to focus entirely on full local production. The fact is that if we intend to go toward development and production in the deep portions of the Caspian Sea, we should focus in parallel on developing infrastructure. The AKSSDU alone cannot be of help to us, and similar platforms need to be built so that activity in the Caspian Sea would pick up speed, which would also bring in necessary technology.

What is the status of our cooperation and interaction with Caspian Sea littoral states?

We have had negotiations with neighboring countries since the past that are still ongoing. These negotiations cover a variety of issues, including provision of services and equipment, joint technical and research cooperation, as well as development.

How do you assess the Caspian Sea’s hydrocarbon reserves?

Our Persian Gulf fields are mainly in the second half of their lifespan, some of which being in the phase of secondary recovery. Some gas fields also need development. But regarding the Caspian Sea, the identified structures are rich in hydrocarbon reserves. Despite high uncertainty, we may undoubtedly speak about the volume of reserves in the Caspian Sea after drilling exploration wells and completing seismic operations. However, given the growing trend of energy consumption in the country, increased gas imbalance and the status of fields in southern Iran, it is necessary to move toward development and production in the north in coming years. In any case, based on the studies carried out so far, the hydrocarbon potential in the Iranian sector might be to the extent to justify any amount of investment.

How attractive can exploration and developments in the Caspian Sea be for foreign investors?

Given the geographical position of the Caspian Sea, which is connected to major consumer markets in both east and west while on the other hand, the existing infrastructure, particularly hydrocarbon transmission pipelines, has pushed to bold relief the specific attractiveness of exploration and development activities of hydrocarbon reserves in this region. Due to growing need for technology and big volume of investment in the Caspian Sea, the model of investment in this zone should be different. In previous years, extensive studies have been carried out to choose the best model of contracting for development in the Caspian Sea. The IPC and buyback contractual framework have been compared. Furthermore, the contract models used in neighboring countries were studied and the best model for Caspian Sea fields is production-sharing agreement (PSA). During the event held in May to introduce opportunities for investment, this type of contract was discussed, which would definitely be attractive to foreign investors. In light of the attractiveness of the PSA model, I think that international overture would favor exploration, development and production in the Caspian Sea. At the event, we introduced 13 investment opportunities associated with field development, exploration and logistics for would-be investors in the Caspian Sea. A number of MoUs have been signed with local and foreign companies about development. We should move to the next phase after carrying out further studies. We had also meetings with several investors about supplying logistic needs, and we received proposals that are under review, after which we would take the next steps about the type of contract.