Iran Offshore opportunities for international companies

Hamid Bovard

CEO of Iranian Offshore Oil Company

Iranian Offshore Oil Company, as the largest offshore oil company of Iran, is in charge of managing 121 oil & gas reservoirs in 50 fields, 11 processing facility complexes, 16 Processing platforms, 100 wellhead platforms, 700 oil & gas production and water or gas injection wells, 3600 kms of offshore pipelines (4-42 inch), 26 million barrels of oil storage reservoirs, and 27 Power plants, along with the capacity of processing 1.2 million of barrels of crude oil (API ranging from 18 to 48). The overall oil in place reserve in field under the responsibility is more than 96 billions of barrels, while the recoverable amount lies in 15 billion and 800 million barrels of crude oil. Bahregansar, Hendijan, Soroush, Norooz, Abouzar, Doroud, Forouzan, Alvand, Nosrat, Esfandiar, Sivand, Dena, Salman, Reshadat, Lavan, and Balal are the main oil fields, as well as Kish, Hengam and Gourzin to name as gas fields. These fields are currently classified as developed and under production. However, there are other fields of this company that have not been developed yet. In addition to the renovations, maintenance of production platforms, and development of common fields are the priorities of the company. Hamid Bovard, former CEO of NISOC, OEOC, and Marun Oil & gas Company, has announced the CEO of Iran’s second oil producer Company (IOOC), with a mission to empower the great potential of this company to regain the credit of good old days.

What are the main areas of activity of IOOC and its features?

IOOC is one of the largest offshore oil & gas producers in the world that has the responsibility of exploiting oil & gas fields in the length of 1200 km of Persian gulf and Oman Sea. The main area of activity of IOOC is located in Persian gulf, where seven main oil producers of the Middle East, Oman, Kuwait, Saudi Arabia, Bahrain, Qatar, and UAE are our neighbors in the sea.

What is the current status of oil production in IOOC? If declined, what seems to be the causes in recent years?

IOOC oil production in the past years was about 700 thousand barrels per day. In the nuclear sanctions era, this production rate reduced mainly. A major part of previous production rate was as the result of activities of international companies in the form of buyback contracts, which faced shutdown in the time of sanctions. Apart from that, equipment and tools failure caused a notable pressure drop in production wells, which requires huge investments to enhance upgraded equipments. In order to achieve previous production rates, numerous projects are planned to be done in IOOC aiming to maintain and further increase the planned production numbers, which provides interesting opportunities for cooperation with international companies.

What are the main challenges for increase in production rate? And how long will it take to reach this level of production?

What concerns us the most is the outdated equipments in facilities. Generally speaking, repair and maintenance costs more in offshore section than onshore. When the goal is determined, appropriate structure should also be established to achieve that goal. In terms of planning, big renovation projects are ready to start, provided that financial matters get resolved. If financed, we can achieve to planned production rates in the next 2-3 years.

Which projects are in the priority for financing?

The development of common fields is a top priority that needs special attention. In addition, modernization of production platforms along with repair and maintenance of other sections are of great importance to us.

How do you assess the vision of development in upstream oil and gas section?

Since we are ahead of schedule in exploration and there are several undeveloped fields, the focus is more on the common fields. However, if the economical situation improves, we will reach to a very good status in field development. We have 40 to 50 fields of onshore and offshore that have good potential for development. In case of participation of international companies, this development will be fat higher pace. In the sixth national development plan, the primary objective is to sustain the production in earlier part and to develop fields further. South Pars, West Karoun and other common fields takes a huge amount of resources to develop to their full potential. In offshore, the priority is with common fields of Forouzan, Esfandiar, Farzad, and Balal.

What are the features of new contract format and how can it help to attract foreign investment?

In the next five years, there will be a great focus on the development of upstream industry. Starting 2017, many tenders will be issued on field development. The new format is based on creating more attractive opportunities for financers. Long-term cooperation along with higher responsibility of developer companies at the production stage are the two main issues that makes a difference with buyback contracts. Also, the presence of Iranian companies as partners with international companies and the enhancement of domestic potential in new contracts are the important points that has been noted very well. Accordingly, eleven domestic companies were qualified as E&P companies. Regarding the consolidated plans in this matter and the newly announced IPC, it is highly expected that international companies be eager to have their market share in Iran oil industry.

What are the main attractiveness for international companies to get involved in Iran market?

About 50 fields have been introduced to be explored and developed in the form of new IPC. In addition, IOOC will announce some projects on repair and maintenance of production platforms. A total of three billion dollars worth of projects is planned for the next 2-3 years. A very good condition is provided for cooperation with international companies. There are lots to be done in upstream section of industry that can result in economical boom, if financed.

How do you assess the potential of domestic companies its changes in recent years?

In the period of sanctions, a good basis for the improvement of domestic contractors was created. At the time, very powerful domestic companies were initialized that can perform in field development section. The priority of oil industry is to enhance this potential. Empowering these companies can form the future for oil industry. As said before, partnership with these companies can be useful for international companies wishing to work in Iran. The potential of domestic companies is ever-growing, as we can already use this potential in development of fields like Azadegan.

As an aware source of oil production in Iran, what is the reason of rapid increasing in oil production after the sanctions lifted?

The major part refers to the fields under the supervision of National Iranian South Oil Company. At the time of sanctions, very good planning was performed in that company which helped a lot in achieving this rate of production. We considered six strategies to improve production. It should be noted that operations in onshore are totally different from offshore section. In fact, the main reason was the good performance of operation experts, which resulted in lower costs. Returning to primary production is different from one reservoir to another and from one well to another. So, we should have precise program for each part. In NISOC, an annual planning is performed to prevent annual production recession of 350 thousand barrels of oil. It was predicted that by the end of 2015, apart from compensation of recession, about 50 thousands of barrels per day be added to previous rate. Similar projects also performed in other subsidiaries of National Iranian Oil Company. Due to the implementation of such programs, the current production capacity was rapidly achieved.

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