The National Iranian Oil Company on Tuesday signed a heads of agreement (HOA) with Persia Oil and Gas Industry Development Co. on developing three oilfields under the Iran Petroleum Contract—the new model of Iran's oil and gas contracts.
According to the agreement, worth $2.2 billion, POGIDC is commissioned to develop Yaran, Koupal and Maroun Oilfields in the southern oil-rich province of Khuzestan via the enhanced oil recovery (EOR) methods, Shana, the Oil Ministry's official news service, reported.
POGIDC is an affiliate of Tadbir Energy Group.
According to an NIOC statement, POGIDC can choose a foreign partner "if necessary".
The agreement was signed in a ceremony attended by Bijan Namdar Zanganeh, the oil minister, Gholamhossein Nozari, chairman of the board of Tadbir Energy, Mohammad Mokhber, the head of Setad Ejraiye Farmane Emam (one of the eight major domestic corporations approved for developing oil and gas projects under the IPC framework alongside foreign companies), Gholamreza Manouchehri, deputy for development and engineering at the NIOC and Naji Sadouni, POGIDC's managing director.
Zanganeh said Iran will sign more IPC contracts by March 2017, but declined to provide specifics. The semi-official Tasnim news agency said NIOC will sign the second IPC agreement on Wednesday.
"Iran needs more than $100 billion investment to develop its oil sector. We welcome cooperation from all companies ... that can provide capital and technology for recovery enhancement," state TV quoted Zanganeh as saying.
The first-ever IPC agreement comes as Tehran has drummed up the new model of contracts as a means of attracting billions of dollars in foreign investments for its sanctions-hit energy sector.
Ali Kardor, the NIOC chief, said last week that Iran will hold the first international IPC tender later this month for the South Azadegan Oilfield.
"Iran's crude oil production must reach 5.2 to 5.7 million bpd in the future," Shana quoted Kardor as saying on Monday.
A heads of agreement is a non-binding document outlining the main issues relevant to a tentative agreement. HOAs are similar to a memorandum of understanding for partnerships, but are not enforceable in a court of law, unlike an MoU.
Other domestic contractors qualified for the new oil and gas projects include Petropars, Oil Industries Engineering and Construction (OIEC), Dana Energy Company, Petroiran, MAPNA Group, Khatam-al Anbia and the Industrial Development and Renovation Organization of Iran (IDRO).
In addition to the development of Yaran joint oilfield, POGIDC will develop both Koupal Oilfield's Asmari and Bangestan reservoirs and Maroun oilfield's Bangestan reservoir.
------- Joint Fields
Yaran joint oilfield, located 130 kilometers off the provincial capital Ahvaz, close to the Iraqi border, has more than 900 million barrels of in-place oil, with an API degree of between 16 and 18, which puts the field's output among Iran's lighter crude blends.
Iran has prioritized the development of joint fields with Iraq. The Arab neighbor has shored up crude production from around 2.5 million barrels a day in 2011 to more than 4.5 million barrel per day, overtaking sanction-hit Iran as the second-largest producer of the Organization of Petroleum Exporting Countries.
According to Abdolreza Haji-Hosseinnejad, the chief executive of Petroleum Engineering and Development Company, Iran is planning to raise production from five oilfields it shares with the western neighbor in the current Iranian year that ends in March 2017.
Iran is recovering from years of sanctions that undermined its economy and trade with the world. The international restrictions were eased in January allowing Tehran to raise crude output and decide whom to sell.