IRAN - The Offshore Oil & Gas Fields.

Lying within the Arabian Basin, the Persian Gulf is a 239,000 sq km waterway with a mean depth of only 25 metres, where hydrocarbon reservoirs are large and production costs are low. Oil from fields in this region contains a high proportion of paraffins. Most of the gas is sour but rich in liquids. States bordering the Gulf collectively have more than half the world's offshore oil and gas reserves.

Offshore fields, some of which shared by Iran, are concentrated from the mouth of the Gulf in the north, near Kharg island, off the Divided Zone and Kuwait, and off Saudi Arabia, to the south where there are groups of fields around Das island and Qatar's Halul island, and along the UAE coast down to the Strait of Hormuz and Gulf of Oman. The region has the world's largest offshore oilfield, Safaniyah of Saudi Arabia. The North Field of Qatar, which is the world's largest gas zone, extends into Iranian waters in the South Pars field. Salman field in Iranian waters is called Abu Al Bukhoosh on Abu Dhabi's side, while Iran's Henjam extends into Omani waters as the Bukha field.

Iran has the longest coastline and is the second largest offshore producer in the region. Its offshore oil production capacity is 701,000 b/d and this should rise to 1.248m b/d by 2010 (see table in OMT).

On July 31, 1980, NIOC had set up Continental Shelf Oil Co. (NICSOC) to take over the nationalised assets of offshore partners: Agip in SIRIP; Amoco in IPAC; Arco, Murphy, Sun Oil & Union Oil of the US in LAPCO; Agip, ONGC & Phillips in IMINOCO; and Elf & SNPA in Sofiran, though in the latter case the French companies were NIOC's service contractors rather than E&P partners. (Before the shah's downfall in early 1979, these five groups had produced 500,000 b/d, compared to more than 600,000 b/d in 1977. The US Navy in April 1988 destroyed several offshore platforms, while Iraq had destroyed those at the northern end of the Gulf. Total damage to Iranian offshore operations were estimated at more than $1 bn).

NICSOC in late 2002 opened an international tender for a number of projects to recover flared gas and undeveloped gas Fms in offshore Gulf oilfields. The $2 bn programme is to collect up to 700 MCF/d from producing oilfields after recovery of NGLs for export, with dry gas to be used for re-injection to boost oil output and for Iran's national distribution grid.

Towsan, 35 km SE of the port of Lengeh found in 2000, is being developed by NICSOC. The field contains 400m barrels of oil, with 100m recoverable.

The Abadan Plain, in the shallow waters of the north, is a highly Fm. Studies show a hydrocarbon-rich anticline of 16 km, which extends to the Jufair field, north of the Abadan refinery. This has aroused considerable interest among foreign companies, including Norsk Hydro which has done detailed studies of 2D data of the onshore part of the plain. Companies see very high potential in the general region and are hoping that the first 20 offshore blocks on offer will include northern waters. The lengthy anticline has been dubbed by some as "Big Brother". A late-2002 tender issued by NIOC for a 3D survey of the Jufair field has fuelled speculation that it was planning a licencing round for the whole of the Abadan Plain. However, experts think the state company may limit the northern Gulf to locals (see Vol. 60, Gas Market Trends No. 14).

The South Pars programme, in 28 phases, will raise Iran's natural gas production by more than 28 BCF/d and a huge volume of condensate over the next two decades. South Pars, an Iranian extension of Qatar's offshore North Field, contains more than 13.5 TCM of recoverable gas reserves.

Each of the phases is to produce 1,000 MCF/d and 40,000 b/d of condensate. The following are those phases that have been awarded under BBCs by POGS and those being tendered by the NIOC unit:

Phase-1: After long delays in work by NIOC companies, IOEC and Pedec, the first phase was taken over in late 1998 by PetroPars (PP) under a BBC. But PP's work has been slow as well. PP has managed the project with Kvaerner, under a $20m three-year contract signed in March 2000, with the latter having supervised the contractors for onshore and offshore facilities. Kvaerner was involved in the conceptual design and basic engineering of the project in 1995 through John Brown Engineers and Constructors of the UK which the Norwegian firm bought in 1996. It has done other engineering work for the project and gave technical help to OIEC for the basic design of the onshore gas terminal. Phase 1 was first scheduled to be on stream in 1999. But it was not until 2004 that Phase-1 started up (see background in Vol. 60, Gas Market Trends No. 14).

Phase-1 is producing 1 BCF/d of gas for Iran use, 40,000 b/d of condensate and 200 t/d of sulphur. The well fluids are carried 100 km through a 32-inch pipeline to the Asaluyeh terminal for treatment. The gas is taken through another 80 km pipeline to feed the IGAT-2 trunkline at Kangan. The condensate is exported by tankers through an offshore loading buoy.

Phases-2&3, developed by Total, were completed in early 2002 and the flows were successfully tested shortly thereafter. Producing 2,800 MCF/d - above the 2,000 MCF/d target - plus 80,000 b/d of condensate and 400 t/d of sulphur, the two phases were in Jan. 2003 handed over to South Pars Gas Co, a POGC unit. The two phases have involved a consortium led by Total (40%), which signed a BBC worth $2 bn on Sept. 29, 1997, Petronas (30%) and Gazprom (30%). The partners are getting paid for their investment and BBC profit margin out of the condensate output, which they are lifting (see background in Vol. 56, Gas Market Trends No. 14).

Phases-4&5 were taken by Agip which signed a $3.8 bn BBC on July 27, 2000. These will be producing 2 BCF/d-80,000 b/d and 400 t/d of sulphur, plus 2m t/y of ethane feedstock for petrochemical ventures at Asaluyeh. Agip holds 60% and is the operator, with PetroPars having 40%. First production began in early 2005.

Phases-6-8 were taken up by PetroPars (PP) under a $2.65 bn BBC signed in Aug. 2000. In late 2000, PP brought in Enterprise Oil for a 20% stake. But Shell, which bought Enterprise in 2001, opted out of the JV. Statoil came in its place and, under an agreement signed on Oct. 28, 2002, took a 40% stake in the venture, reducing PP's share to 60%. Statoil became the offshore operator. Phases 6-8, to produce 80 MCM/d of sour gas for injection into Agha Jari oilfield, 1.2m t/y of LPG for export, plus 120,000 b/d of condensate and 600 t/y of sulphur. They should be on stream in 2007.

Phases 9&10 are being developed by POGC under a $1.6 bn EPC contract given in Sept. 2002 to a consortium of South Korea's LG Engineering & Construction and two local firms - OIEC and Iran's Marine Installation Engineering & Construction Co. for the offshore and onshore facilities. The consortium is to build two offshore platforms, lay 210 km of 32 inch subsea pipeline to bring gas to the port of Asaluyeh and set up processing facilities at the port. This is to produce 2,000 MCF/d of gas, 80,000 b/d of condensate, 400 t/d of S and 1.05m t/y of ethane. Phases 9&10 are to supply gas to the domestic network. The condensate and sulphur will be exported to generate hard cash. But work has been slow and Phases 9&10 will not be on stream before 2007.

In early 2005 POGC awarded the main drilling package to a consortium led by the UK-registered Oriental Oil Kish Co. and including a Cayman Islands-registered unit of the US' Halliburton. The $300m, 52-month contract covers offshore drilling in the field. But Halliburton later withdrew from the project to avoid Washington punishment.

Pases 11 to 14 will be developed for four LNG export ventures. Pars LNG from Phase-11 (NIOC 50%, Total 30% & Petronas 20 - with Phase-11 to be developed by Total); NIOC LNG from Phase-12 (NIGEC 100%, with PetroPars to develop Phase-12 to produce 3,000 MCF/d and may take India's IOC as a partner in this); Persian LNG from Phase-13 (with Shell/Repsol to develop Phase-13, and Iran LNG from Phase-14 (which would involve Indian and Chinese companies for the development and for purchase of the LNG output - see Gas Market Trends No. 15).

Phases-15&16, to produce 2,000 MCF/d of gas, 1m t/y of LPG, 80,000 b/d of condensate and 1m t/y of ethane, is to be developed by POGC under an EPC contract being negotiated with a consortium of two Iranian companies, Sadra and Ghorb Khatem, in partnership with Aker Kvaerner. This group has submitted the lowest price for the project worth about $2 bn. The same bidders have been asked to submit new proposals for an EPC contract for an almost identical project - the development of Phases-17&18.

The Oil Ministry in early 2005 invited Indian oil and gas companies to participate in the development of further South Pars phases. There are ten more phases left. The ministry wants POGC to dedicate at least one block specifically for exporting gas to India through an overland pipeline passing through Pakistan. It is in this block that Iran has invited participation from Indian oil and gas firms including ONGC, Indian Oil Corp. (IOC), Oil India and GAIL. National Iranian Gas Export Company (NIGEC) Chairman M.H. Rahabari earlier this year said: "We very much welcome Indian companies to participate in the development of one of the phases of gigantic South Pars gas field that will export natural gas to India through a 2,775 km long pipeline" (see Gas Market Trends No. 15).