The experience of most nations shows the companies that joined E&P business were mostly oil contractors that gradually established a new realm for their activities like general contracting or investment holding.
Brazil authorized private E&P companies in 1997. There are currently 17 E&P firms operating in Brazil which has also an association or independent E&P firms. But E&P companies have to reconsider their statute to conform to exploration and production activities. Or if they are willing to continue their servicing activities they have to establish another company to work as E&P firm.
The technical capability of companies, manpower, and management of upstream projects, risk management and financial capacity are among criteria which have to be taken into consideration.
As far as the formation of E&P companies is concerned the important point is that these activities are high-risk and if a company is not able to manage risks, will be facing numerous obstacles. Therefore, business management is the main issue in the activity of E&P companies.
E&P companies are required to have a powerful structure in attracting and developing technology. Exploration and development technologies are instrumental in helping them achieve their profitability objective. The companies that are willing to step into this sector have to develop their technological development capability. Any investment in this field may not necessarily end in quick and short-term profitability. Furthermore, although high-risk exploration, development and production activities in the upstream oil sector need huge financial resources, such skills as attraction of investment, management of physical assets and effective participation are key to these companies’ success. Undoubtedly, development of well-structured companies for the development of the petroleum industry is a must in every country. Furthermore, since such entities have yet to take shape in Iran, assessment of the qualifications of these companies in the country is not separate from empowering them through drawing a roadmap for them towards excellence. Of course necessary legal support for the companies willing to operate in this sector would be of great help to the improvement of processes.
To further know Iranian E&P companies, we talked to some of them at the 24th Iran Oil Show.
Financing a Must
Saeed Shad, deputy CEO of the Iranian Offshore Engineering and Construction Company (IOEC), said IOEC was working in compliance with the global standards honored by other E&P companies.
“One of the most important MOUs for oil field development with National Iranian Oil Company (NIOC) was for the jointly-owned Sohrab field. Our MDP has already been proposed to the client, pending finalization,” he said.
Shad said IOEC was in talks with NIOC Directorate of Exploration for operating new exploration projects.
“Studying green fields is on our agenda,” he added.
Shad said cooperation with other E&P companies was another objective sought by this company, adding: “One of major factors in the materialization of objectives in these projects is good investment. So far, numerous measures have been made for employing domestic and foreign financers.”
Referring to changes in the structure and approach of IOEC over the past two years to become an E&P firm, Shad said: “For instance, the drilling section of this company managed to drill 22 wells for Phase 13 of the South Pars gas field in less than 700 days, which was a record.”
IOEC has undergone major structural changes in the past years like establishing new sections for operation and studying oil and gas reservoirs, he said.
Shad added: “In my view, transforming general contractor companies into E&P would require a process of transition in the operation system.”
He said IOEC had offered to develop three onshore oil and gas fields, saying the company was in the process of signing an agreement with an Iranian consulting group to develop the three fields.
“Besides, we are in talks with three foreign companies to engage them in the development of these fields,” he added.
“Based on the new model of oil contracts, foreign companies are required to develop oil and gas fields alongside Iranian partners. We are now financially ready for such cooperation. We have so far signed financial memorandums worth $500 million with foreign financers,” Shad said.
DCI to Drill in Siri
Fazel Jamalzadeh, CEO of Drilling Company International (DCI), affiliated with Petroiran Development Company (PEDCO), said DCI owned two offshore drilling rigs which would soon start work in the Siri oil field.
He said Siri is one of 28 oil and gas fields National Iranian Oil Company (NIOC) is offering for development.
He added that necessary commodities had been purchased for the EPDF project.
Jamalzadeh said NIOC planned to assign the development of 28 oil and gas fields to Iranian E&P firms.