IRAN'S OIL DEVELOPMENT: $1.3 BLN

PLATTS - 09 Feb 2020 - Iran awarded a $1.3 billion contract to a domestic company for improved oil recovery at two onshore oil fields in the southwest part of the country, oil minister Bijan Zanganeh said Saturday.

The contract was awarded by the National Iranian South Oil Co. to general contractor Mapna Group, with gross income from the project seen at $6 billion at an oil price of $50 a barrel, Zanganeh told reporters at a signing ceremony. The two fields in the southwest Khuzestan province Parsi and Paranj are currently producing 52,000 b/d of crude oil. The 10-year contract will raise the production to 85,000 b/d, with output over the 10 years at around 121 million barrels.

"The contract core sum is $876 million and with its side costs the investment will reach $1.3 billion," Zanganeh said.

The contract was signed by Ahmad Mohammadi, managing director of the National Iranian South Oil Co., and Abbas Aliabadi, managing director of Mapna.

The two fields hold around 12 billion barrels of oil and development will include desalination and drilling of 29 new and submersible wells. Parsi, which pumped 450,000 b/d in the past, will be injected with 280 million cubic feet/day of gas, and Paranj with 24 million cf/d, Mohammadi said.

The Mapna contract is the fifth modeled after the Iran Petroleum Contract, with the first being South Pars gas field phase 11, the second Aban and West Paydar, the third Sepehr and Jofeyr and the fourth, East Paydar, Dalpari and Cheshmeh Khosh, Zanganeh said.

One of the differences between the Mapna contract and the model IPC is that the contractor will support the operation even though it won't directly be present at the site, Zanganeh said. "Finance is an important issue for us... such projects even the smallest ones require $1 billion in two, three years. Some of the money should come from the capital market. We should now consider other sources than the National Development Fund given the economic situation of the country," he said. The National Development Fund is a vehicle for surplus oil income.

The new contract "has become a little bit Khuzestani" which makes it a first for the National Iranian South Oil, Zanganeh said.

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