Partnership in Exploration Blocks
The Exploration Directorate of National Iranian Oil Company (NIOC) witnessed record exploration during the fourth and fifth Five-Year Economic Development Plans. It was ranked first in the world in exploration for several years in a row. In those years, oil and gas field exploration in the country was much more than envisaged. But in recent years, this industry has been ignored due to insufficient resources.
Saleh Hendi, director of exploration at NIOC, tells Iran Petroleum in an interview that exploration industry in Iran needs renovation.
Here is the full text of the interview with Mr. Hendi.
Q: During the 3rd and 4th development plan, 14 exploration blocks were awarded to foreign companies for development. What was the result?
A: Iran is a vast country with highly potential of oil and gas exploration. According to geological and seismic data, Iran has been divided into five zones in terms of oil and gas capacity. The zones with high potentiality for hydrocarbon reserves are located in the west and southwest. A large number of oil and gas fields have so far been discovered in these zones, however more oil and gas fields are hoped to be explored. Contribution of international companies to Iran’s upstream oil industry dates back to before the 1979 Islamic Revolution. By that time, extended exploration studies had been done and new fields had been found.
After the Islamic Revolution, NIOC was tasked in 1997 with formulating a framework for awarding exploration blocks to qualified international companies with the objective of attracting foreign investment, expanding exploration operations across the country even in low potential and high-risk zones and accelerating exploration of hydrocarbon reserves.
From 1998 to 2006, 15 blocks were awarded under buyback deals to companies from Europe, South America and East Asia. In all these 15 blocks, 26 exploration and appraisal wells were drilled, resulting in the exploration of 8 oil and gas fields in Iran. Among the blocks, Anaran (Azar field), Mehr (Band Karkheh field) and Farsi (Farzad B field) are commercial. Given changes in Iran’s exploration plans and ongoing progress in new technologies, four more fields are expected to become operational in the future. For instance, some oil fields in Iran are of low permeability. Or some fields containing heavy crude could be expected to become commercial if such technologies as hydraulic fracturing are applied.
Q: In addition to the discovery of 8 oil and gas fields in Iran, what else was achieved from the cession of work to foreign companies?
A: In addition to what I already mentioned, I would like to highlight the high volume of exploration operations and gathering valuable geological and geophysical data and drilling of 26 wells. They have all made great contribution to defining exploration strategies and conducting studies for that purpose. Furthermore, more than $1 billion has been invested in these blocks by international companies. In this regard, introduction and application of modern exploration technologies in these projects have provided the ground for Iranian experts to get familiar with the latest achievements in the petroleum industry in the world.
Q: How many new exploration projects does Iran have for cession to foreign companies under IPC (Iran Petroleum Contract) deals?
A: Fourteen new exploration blocks are to be put out to tender. The blocks to be offered for IPC contracts are Abadan, Bamdad, Timab, Zahab, Moghan, Kavir, Raz, Sarakhs, Dousti, Taybad and Sistan, Mahan, Parsa and Toudej.
Q: Working in some blocks like Sistan is riskier than working in blocks located in the west. Are there any incentives in the IPC contracts for foreign companies that choose to work in these high-risk blocks?
A: No. Our objective behind putting out a variety of blocks is to attract companies with different expertise. We think that at least four of these blocks will be welcomed by foreign companies.
Q: Have you held any talks with foreign companies about the exploration blocks following the removal of sanctions?
A: Talks have been held on the general outlines. Companies that used to operate projects in Iran have shown their willingness for presence in these blocks, but we have to wait for more official actions.
Q: Has any contract or memorandum been signed with foreign companies since sanctions were lifted?
A: So far, four memorandums of understanding have been signed with international companies and top universities for joint exploration studies. Three of them have been implemented and are under way now. We hope that the fourth one will be implemented soon.
Q: How do you assess Iranian companies’ potential for cooperation with foreign companies?