After Rouhani re-election, Eni and Total move ahead in Iran
Tuesday, Jun 27, 2017
The emphatic re-election of President Hassan Rouhani has already begun to bear fruit for the Iranian oil & gas sector, with his pro-West strategy responsible for recent agreements with IOCs Eni and Total.

In Eni’s case, a memorandum of understanding (MoU) has been signed to carry out feasibility studies and potential investment in the offshore Kish gas field in the Persian Gulf. With in-situ reserves of around 66 tcf (1.9 tcm) of natural gas and around 1 billion barrels of gas condensate, around 45 tcf (1.3 tcm) and 331 million barrels, respectively, appear recoverable.

In February 2010, an initial US$10 billion financing deal was signed between Iran’s Bank Mellat and the National Iranian Oil Co. (NIOC) for the initial development of the site. Since then, 14 wells have been drilled and, at the end of the first quarter of this year, progress was standing at 85%, according to National Iranian Drilling Co. (NIDC) managing director, Mohammadreza Takaidi.

According to the NIOC, the second and third development phases of the field will produce 1 bcf (28 mcm) per day of gas each when completed. The output will be transferred initially to the Kish Island coast via a 10-km land pipeline, then on to the mainland through a 17-km offshore pipeline and a separate three kilometre pipeline to the mainland refinery, and then finally via a 94-km pipeline to the seventh cross-country (IGAT-7) pipeline of Iran.

In tandem, the gas condensate produced during gas processing will be transmitted to the single buoy mooring (SBM) in the Persian Gulf via a 5-km offshore pipeline.

Eni also last week signed a provisional agreement to pick up where it left off in the third phase of development of the Darquain oilfield in south-west Iran within the next six months.

The Italian firm had completed phases one and two of the Darquain field project before the ramping up of sanctions in 2011/12 caused it to cease operations on the site.

With estimated reserves of 289 million barrels of crude oil in place, US$1.5 billion of further investment is earmarked in order to lift output from the current 160,000 bpd to 220,000 bpd, to augment the US$600 million already invested in the site.

Ali Kardor, managing director of the NIOC, highlighted last week that the re-involvement of the Italian oil and gas giant is evidence that international companies have not been deterred from investing in Iran despite continued US sanctions and the rise in tensions between Iran and its arch-rival Saudi Arabia in recent weeks. This has been exacerbated by Tehran’s belief that Riyadh was involved in the Daesh attacks in Iran that killed 18 people earlier this month.

Tehran is similarly upbeat about the pledge last week from French oil and gas behemoth, Total, that it will proceed with an initial US$1 billion investment in the South Pars Phase 11 project, long-stymied by sanctions-related concerns.

With the US having now extended sanctions waivers for Iran, Total’s CEO, Patrick Pouyanne, confirmed the US$1 billion initial investment last week, saying: “It is worth taking the risk at US$1 billion because it opens a huge market … and we have taken into account [sanctions] snap-backs … and regulation changes.”

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