IRAN - Profile - Mostafa Khoee.

Mostafa Khoee, made CEO of the new PetroIran Development Co (Pedco). in Nov. 1998, is another prominent executive working closely with Dr. Mir-Moezi. An Azeri, Khoee was formerly was head of Pedec, a position he took in 1994. Until 1994 he was managing director of the Iranian Offshore Oil Co. In his new post, Pedco acts as a general management subsidiary of NIOC in charge of upstream activities in Iran.

Khoee graduated from Baghdad University in neighbouring Iraq in 1975. A soft-spoken executive but a tough nut to crack, he has held key positions in NIOC since the revolution of 1979. Now aged 53, he is in charge of one of NIOC's flagship subsidiaries, created to streamline the oil sector. Pedco in 2002 signed a $400m BBC with NIOC to upgrade the offshore Foroozan/Esfandiar oilfields in the Persian Gulf. This was the latest of a series of projects taken on by Pedco.

Operating out of a high-rise building in central Tehran, Pedco has so far escaped the notoriety that has dogged other companies floated off by NIOC, particularly PetroPars whose founders face court cases over alleged corruption and mismanagement. The company lack the resources to match its high ambitions, but still benefits from the positive image it cast at its creation in 1999.

With 150 engineers and managers at HQ and several hundred staff at various project sites, Pedco is particularly proud of its subsurface engineering capabilities. Four engineers from France's Schlumberger Technical Services form part of the core team. Khoee stresses that the Schlumberger specialists are not subcontracted to carry out work for Pedco but are "integrated into the team".

Khoee says the company maximises its local content, tapping a large pool of Iranian engineers and a growing number of Iranian equipment manufacturers.

Khoee started with NIOC as a reservoir engineer on Lavan island in 1978, moving on to the Iranian Offshore Oil Co., which he took over in 1983. He has served on the boards of Pedec and POGC (see DT). He was also on the board of NIOC itself.

Pedco is to raise the production capacity of Foroozan/Esfandiar fields from less than 40,000 b/d to about 105,000 b/d. Pedco was put in charge of this project after the failure of a joint proposal with BHP Billiton of Australia to NIOC. That scheme could have trebled output at the two fields but would have cost nearly $1 bn. Pedco has undertaken to do the more modest development by itself, although it will tender for most of the engineering and construction work.

Pedco first hit the headlines outside Iran in 2000 when it got a $850m contract to repair and upgrade the Salman offshore oilfield and its Khuff gas structure. Pedco is to have a related onshore gas plant built by an EPC contractor. John Brown Hydrocarbons of the UK and Technip-Coflexip of France have been assigned engineering roles for the offshore and onshore facilities. Salman, destroyed by the US navy during the 1980-88 war between Iran and Iraq, is a big project with oil output expected to rise by nearly 50% to 130,000 b/d in late 2003 and new gas production of 500 MCF/d from late 2004.

Pedco in 2001 won the contract for the Nosrat/Farzam offshore fields, where output targets are relatively modest. At Nosrat, five new production wells have been completed and output has gone up by 9000 b/d to 13,000 b/d. At Farzam, a new find, Pedco is to submit to NIOC a development plan in 2003.

Pedco also has a drilling capability with three jack-ups operating in the Persian Gulf. The company has been using its own rigs as well as additional ones from Naftkav, a semi-privatised NIOC spin-off, and the UK's KCA Drilling at Salman, Foroozan/Esfandiar and Nosrat/Farzam.

Pedco uses NICO Int'l, a Jersey-registered NIOC subsidiary, as its financier. Pedco itself is registered in Jersey, giving it more room for manoeuvre and reducing the bureaucratic hurdles plaguing other state organisations in Tehran. Khoee says he generally supports controversial reforms to streamline the oil sector through greater competition and efficiency. Closer involvement by foreign companies is also seen as an important element in strengthening local firms.

Pedco has ambitions of going international. After a premature effort in 2000 to bid for projects in Libya and elsewhere, Pedco is "now focusing on Iran". But Khoee says the company is preparing itself eventually to become active in the CIS and in North Africa "by ourselves or with a foreign partner".

Within Iran, Khoee is aiming at the South Pars oil project, a promising but complex structure in Persian Gulf waters near the giant gas field of the same name. South Pars has 10 bn barrels of oil in place but promises very low recovery rates. Nevertheless, a projected output target of 100,000 b/d would put Pedco in the big league of oilfield operators.

First, however, Khoee and Pedco will have to show they can deliver the barrels at their existing commitments in Iranian waters. Whether Pedco can make a breakthrough or proves its critics right will become apparent by end-2003, when progress will be seen at Salman and Foroozan/Esfandiar.