Iran likely give up SP oil layer to Qatar

The oil inspection affairs department of the General Inspection Organization of Iran has reported that Iran is currently extracting less than 35,000 barrels of crude oil from the South Pars gas field's oil layer, while the Qatari side is exploiting as much as 450,000 barrels per day.

The South Pars gas field is associated between Iran and Qatar. It holds around 30 trillion cubic meters of natural gas. It has an oil layer with an estimated reserve of 1.6 billion barrels with 30.3 deg. API with 1.9 percent sulphur.

According to studies in 2005, the oil layer is divided into two sections, but the National Iranian Oil Company's exploration department rejected the theory in 2010 using existing geophysical surveys. The oil layer is jointly owned by Iran and Qatar.

The 13-fold exploitation of Qatar compared to Iran from the oil layer means that reserves in the Iranian side will be flowing down into the southern section in Qatar in the long run.

Maersk Oil Qatar AS Company of Denmark discovered in 1992 the South Pars oil layer (which is called Al Shaheen field in Qatar). It started developing the field, under production sharing contract with the state Qatar Petroleum Company.

Due to the fact that the field is located in very thin reservoir structures, oil is very hard to be extracted, so that Lewis Affleck, managing director of Maersk Oil Qatar announced that the field had been evaluated by many foreign companies as marginal and unattractive due to the difficulties of operations.

The Iranian section of the field was discovered in 1988, but the first exploratory well was drilled 10 years later. After holding unfruitful tenders for six years to attract foreign contractors, implementing the first phase of the development plan was transferred without holding a tender in March 2005 to Petro Iran Company as a buy back contract with 19 months duration. According to the contract, the plan would have been completed by December 2006.

Unlike Iran's standstill, Qatar is currently extracting some 60 percent of its total 757,000 barrels daily output from the South Pars oil layer. In 2010, Qatar extracted 300,000 barrels of oil per day from the oil layer, while the figure has surged to 450,000 barrels per day in 2012.

In March 2010, Maersk completed installation of 15 new platforms and related offshore facilities at the Al Shaheen field. Installation of 131 of the 160 production and water injection wells were also completed.

Iran has 26 joint oil and gas fields with its neighboring countries, but the lack of modern technology and sufficient budget for developing the fields as well as considering the fact that developing these fields are easier compared to the South Pars oil layer, the country will not probably be able to see a progress in developing the South Pars project. However, Qatar is exploiting the oil layer at an astonishing pace.

For the time being, the only foreign company in the South Pars, namely China's CNPCI, is inactive. The company signed a contract three years ago to develop the South Pars phase 11, but it has so far done no activity in this regard.


Dalga Khatinoglu /Trend/