Managing Director of Iran‘s Petroleum Engineering and Development Company Noureddin Shahnazizadeh said that Inpex signed a memorandum of understanding on the project last June and with the passage of six-month study period, a final proposal is expected soon, said, Kyodo News reported.

Inpex — which previously held a 75-percent stake in the project but pulled out in 2010 amid US sanctions on Iran — was the first foreign company to sign a memorandum last year on the oilfield which is one of the largest in the world.

However, it has four major rivals — Total SA, Royal Dutch Shell PLC, Petroliam Nasional Bhd (Petronas) and China National Petroleum Corp. — which have also started assessments and begun to send proposals.

“Inpex is one of the good names in the oil industry and as it has experience and data regarding Azadegan, it is one step ahead of its rivals and has a chance to win the Azadegan tender,” Shahnazizadeh said.

Japanese companies have earlier encountered major obstacles in doing business in the Iranian oil and petrochemical industries.

A multibillion-yen petrochemical project by Iran-Japan Petrochemical Company came to an end in 1991 without getting off the ground due to the prolonged Iran-Iraq war.

“There is no remaining conflict between Iran and Japan from the past over Azadegan,” Shahnazizadeh asserted, noting, “We understood Inpex’s situation when they were forced to leave the project, and now they are welcome again.”

According to Shahnazizadeh, Total has already handed over a final proposal for the project, while Inpex and CNPC will submit their presentations soon.

The deal is expected to be completed around the first quarter of 2017, and the contractor will be chosen by summer.

Technical, financial and recovery factors will determine the winning bid, Shahnazizadeh said.

West Karoun oil region, which includes the Azadegan and Yadavaran oilfields, which has a 67-billion-barrel deposit of crude oil, has a contract value of some $25 billion.

About $9 billion has already been invested in West Karoun, but Shahnazizadeh stopped short of specifying how much the Azadegan contract alone is worth.

International companies started negotiations to return to the Iranian market after Iran inked a landmark deal with world powers in 2015 to modify its nuclear activities in return for an end to economic sanctions.

Only companies that Iranian authorities determine as contributing to the transfer of modern technology to Iran are recognized as ‘qualified’.

“Iran expects Japan to transfer and apply the use of modern technology in exploration, drilling and recovering to increase the rate of recovery, which is the most important criteria for Iran,” Shahnazizadeh said.

During heavy sanctions from 2010 to 2015, Iran’s oil production fell to nearly one million barrels per day. Japan nevertheless remained the third-largest importer of Iranian crude oil, after South Korea and China.

Japan was also the only country that accepted insurance risks through the period and transferred oil from Iran on its own vessels — a move that Shahnazizadeh described as ‘unforgettable loyalty’.

The Japanese government signed an investment pact in February to help Japanese companies do business there amid intensifying foreign competition.

Then in February, the government-backed Japan Bank for International Cooperation and Nippon Export and Investment Insurance gave Iran a credit of up to $10 billion.

Iranian officials said they hope political issues, especially recent changes in the United States, will not negatively impact cooperation between Iran and Japan, as was the case in 2010.

“I believe we will have a very close and friendly relations with Japan in the oil sector in the future, as long as a third party doesn’t impact our relations negatively again,” Shahnazizadeh said.

Apart from Inpex, which is the only Japanese company that has signed a memorandum of understanding in Iran’s oil upstream, five other Japanese companies are recognized as qualified to participate in downstream projects like petrochemical and refinery.

After the lifting of sanctions, Iran’s oil production increased and reached 3.5 mbd within nine months, returning to the same level as in 2011.

Oil industry officials aim to keep increasing output in coordination with multinational companies.

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Gholam-Reza Manouchehri, the deputy for engineering and development affairs of the National Iranian Oil Company (NIOC), specified neither the companies nor the projects. Nevertheless, he did indicate that the projects were large scale.

The foreign companies will play a central role in the development of major fields.

Manouchehri further emphasized that the companies that won oil sector deals in Iran would have to team up with locals, IRNA reported.

“The foreign companies will play a central role in the development of major fields,” said Manouchehri. “Still, they will have to use the help of Iranian companies for their projects.”

The official also added that Iranian companies can be only the project leader for the development of small fields and can use the help of foreign enterprises.

Elsewhere in his remarks, Manouchehri said that Iran has so far signed memorandums of understanding (MoUs) with 10 companies over the development of certain oil sector projects. However, he did not name the companies and the projects for which they have signed the MoUs.

Last week, the NIOC invited eligible international companies to participate in the pre-qualification phase of a tender for 50 exploration and development targets across the country.

The targets include a variety of low and average risk oil and gas fields. They include lucrative oil targets like South Azadegan, Changuleh, and Ahwaz-Bangestan as well as promising gas fields such as Kish, Farzad-A, North Pars, Golshan and Ferdowsi.

The tender is a central part of Iran’s plans to increase its production to above four million barrels per day – the same level that existed before a series of draconian US-led economic sanctions were imposed against the country in 2012. /IRAN-DAILY

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India’s oil imports from Tehran in January-September grew 90.5 percent to an average 411,900 bpd, ship tracking data and a report compiled by Thomson Reuters Oil Research and Forecasts showed.

Iran has been boosting oil shipments to recoup market share.

The OPEC producer’s total crude oil and condensate sales likely reached around 2.8 million barrels per day in September, two sources said, nearly matching a 2011 peak in shipments before sanctions were imposed.

Iran, along with Libya and Nigeria, is allowed to produce “at maximum levels that make sense” as part of any output limits in a surprise deal reached recently by the Organization of the Petroleum Exporting Countries (OPEC).

Under pressure from sanctions, New Delhi had curbed Iranian oil shipments, reducing Tehran’s overall share of India’s oil imports to 5.8 percent in the two fiscal years from April 2013, compared with about 11.3 percent before sanctions were imposed.

India’s average Iranian oil imports in April-September — the first six months of India’s financial year — rose nearly four-fifths to about 468,000 bpd, the data showed, with Tehran’s share in overall purchases jumping to 11 percent — just below pre-sanction levels.

Average imports over the period were at their highest in at least 15 years, the data showed.

India, the world’s third-biggest oil importer, shipped in a record about 4.47 mbd oil in total in September, about 4.4 percent more than the previous month.

State-run Mangalore Refinery and Petrochemicals Ltd. was the biggest importer of Iranian oil in September buying about 150,200 barrels per day, the data showed.

Essar Oil imported about 134,000 bpd followed by 131,000 bpd by Indian Oil Corp. and 69,000 bpd by Reliance Industries, Hindustan Petroleum imported about 68,000 bpd oil.

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North Azadegan is one of the five oilfields, dubbed the West Karoun oilfields, Iran shares with Iraq at the western part of Iran’s southwestern region of Karoun.

The project of developing North Azadegan oilfield is divided into two phases, each aimed at producing 75,000 barrels per day (bpd) of oil and 39 million cubic feet per day of gas.

According to Behbahani, since the first phase is almost completed, the payments to the Chinese contractor of this phase are being arranged.

Based on the initial agreement, China National Petroleum Corporation International (CNPCI) should present its proposal for the second phase, and in case of being approved by National Iranian Oil Company (NIOC), the second phase of the development project will be executed.

“For the second phase, producing 25,000 barrels per day is on the agenda,” Behbahani said adding that the preliminary studies of the second phase carried out by Petroleum Engineering and Development Company (PEDC) show that the oil in place amount of the field will be about 6.3 billion barrels in the second phase.

Elsewhere in his remarks, the official noted that in the project of developing North Azadegan oilfield, 67 percent of the contracts are allocated to domestic companies especially National Iranian Drilling Company.

Earlier in July Behbahani told the Tehran Times that foreign investment in development of North Azadegan oilfield is conditioned on preserving the national interests of Iran.

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