Tatneft to sign $700m heavy crude deal with Iran
Development plan aims to yield 55,000 bpd of heavy sour crude
UPDATE 1 19/12/1110:12 GMT - Tatneft has since released a statement denying an agreement has been signed
Iran’s National Oil Company and Russia’s Tatneft are to sign a $700 million deal today for the development of the supergiant Zagheh heavy crude oilfield in southwest Iran.
According to a Mehr news agency report, the aims to produce 7,000 barrels per day (bpd) of heavy crude from the oilfield in the first phase and boost it to 55,000 bpd in subsequent phases.
In-place reserves of Zagheh heavy oil field, locvated in the Bushehr province, have been estimated at 1.249 billion barrels at 4,230 metres depth with an API heaviness index of 14.6 to 15.6, according to Shana, the Iranian oil ministry’s news service.
The Zagheh field has been left inactive for several years, as high recovery costs made developing the field uneconomical. Tatneft have been in the running to develop the field since at least April 2004, when the Russian firm signed a test development contract. Field development talks have been going since at least 2006.
Eighteen heavy and extra heavy crude oilfields have so far been explored in Iran. The Ferdowsi oilfield, as the largest extra heavy crude oilfield in the Middle East, will become operational by the end of the Fifth Five-Year Economic Development Plan (2015), Iran’s NOC director for planning affairs Abdolmohammad Delparish announced in September.
According to BP’s Annual Statistical Review, Iran has 137 billion barrels of proven reserves. The International Energy Agency forecast in a 13 December report that Iran's oil production capacity will decline by 890,000 barrels a day to just under 3 million barrels a day by 2016, due to tighter U.S. and European Union oil sanctions targeting the country's upstream oil and gas sector.
The news contradicts a statement made by Ahmad Qalebani, managing director of Iran’s NOC, just a day earlier, when he said Iran has excluded developing heavy crude oilfields ahead of other development plans. “However, if any entity offers buy-back or finance investments on non-associated or heavy crude oilfields, “we will welcome the offers”, said Qalebani, according to an ISNA report.
Iran is currently a difficult environment for oil firms, with logistical issues hampering field development, and an impatient oil ministry that has recently suspended and cancelled contracts citing slow performance by Russian and Chinese companies.