Nouroddin Shahnazizadeh, the managing director of the Petroleum Development and Engineering Company of Iran, told the domestic media that the leading European bidders for the project include Total (France), Shell (UK/Hollande), Eni (Italy), Wintershall (Germany), Rosneft (Russia), OMV (Austria) and Maersk (Denmark).

Shahnazizadeh added that several Asian companies including CNPC and Sinopec (China), ONGC (India), Pertamina (Indonesia), Petronas (Malaysia) and PTTP (Thailand) would also participate in a tender over South Azadegan.

The official said officials from the bidding companies had visited Iran for three days to become fully aware about the conditions of the project. Almost a dozen of them, he added, had been even taken to visit the project site.

Nevertheless, Shahnazizadeh did not indicate when the tender over South Azadegan would be held.

Iran has repeatedly postponed the tender over the giant field which it jointly shares with Iraq.

Reuters quoted an unnamed Iranian official as saying in June that the bidding over the project had been delayed by another few months.

This, the unnamed official told Reuters, was meant to allow energy companies more time to study the field.

Iran discovered Azadegan oil field in 1999 in what was the country’s biggest oil find in decades. The country accordingly teamed up with Inpex to push the project toward development. However, the Japanese company later quit the project in what appeared to be the result of US sanctions against Iran.

The NIOC later divided the project into South Azadegan and North Azadegan and both were awarded to China’s CNPC when Iran’s former president Mahmoud Ahmadinejad (2005-2013) was in office.

The media reported in 2014 that Iran’s Oil Minister Bijan Zangeneh had sidelined CNPC from South Azadegan due to its protracted delays in developing the field.

South Azadegan is believed to hold an in-place oil reserve of about 33.2 billion barrels and its recoverable resources estimated at about 5.2 billion barrels.

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Chinese firms were expected to lift between three million to four million barrels more Iranian oil each quarter in 2017 than last year, four sources with knowledge of the matter estimated. That would be about five percent to seven percent higher than the 620,000 barrels per day (bpd) of Iranian crude the country has imported during the first 11 months of 2016, according to the customs data.

Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), won an exemption from the group’s production cuts agreed to on Nov. 30 and may raise output slightly.

China’s demand for foreign crude could touch new highs as state-run refiners start up new plants and as Beijing allows more independent refiners to import crude, with the country forecast to remain a key driver of 2017 demand growth.

State refiner Sinopec Corp and state-run oil trader Zhuhai Zhenrong Corp, the two biggest Chinese lifters of Iran’s oil, are set to roll over annual supply agreements with National Iranian Oil Co (NIOC), with combined volumes of about 505,000 bpd, two sources with knowledge of the agreements said.

Additionally, China National Petroleum Corp (CNPC) and Sinopec expect to lift more oil this year from two oilfields they operate under service contracts, the sources said.

A press official with Sinopec said the company does not comment on operational matters. CNPC and NIOC did not immediately respond to requests for comment.

Sinopec signed a development deal for the Yadavaran field in late 2007 with CNPC signing a deal for the North Azadegan field in 2009, after Japanese and European companies pulled out of the projects, both in the southwestern Iranian province of Khuzestan, due to sanctions over Iran’s nuclear program.

Both fields started pumping oil in early 2016, with North Azadegan reaching full production in the third quarter and Yadavaran in the fourth quarter, and they are currently pumping at around 160,000 bpd.

“The terms of return on investment are still being finalized …but it’s safe to say Sinopec is going to lift more from Yadavaran this year than last,” said a Beijing-based oil executive familiar with Sinopec’s operations on Yadavaran.

A separate senior trading source estimated that Sinopec could lift about four million barrels of Yadavaran crude, considered a heavy grade with an API gravity rating of about 25, every quarter this year. The person did not give an earlier comparison.

After first shipments last October, CNPC is expected to lift an average of about three million barrels from North Azadegan each quarter, said a second senior trader with knowledge of CNPC’s Iranian production. /Reuters

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“Oil production west of Karun must reach one million barrels per day,” Rouhani said on Sunday, referring to the North Azadegan, Yadavaran and North Yaran fields. “This is a realistic goal, and we need investment and technology,” IRNA reported.

Output at the fields west of the Karun River rose from 65,000 barrels per day in 2013 to about 250,000 barrels per day.

Iran had expected to reach that output target by the end of the year, Mohsen Ghamsari, director for international affairs at the National Iranian Oil Co., said in September.

North Azadegan is presently producing 85,000 bpd. Production from Yadavaran and North Yaran stand at 115,000 bpd and 30,000 bpd, respectively.

Accordingly, Iran’s production from oilfields on the western bank of the Karun River, that includes the above fields, has increased by above 250,000 bpd.

Iran awarded North Azadegan to the China National Petroleum Company (CNPC), Yadavaran to China’s Sinopec, and North Yaran to Iran’s Persia Oil and Gas Development Company through contracts worth $2.5 billion, $3 billion and $0.6 billion, respectively.

Rouhani said that Iran needs a total investment of at least $18 billion to develop all West Karun fields as well as the latest technology to guarantee increased oil recovery at the fields.

He noted the Ministry of Petroleum has effectively used the investment potentials created after the removal of sanctions in January under a nuclear deal, known as the JCPOA, with six world powers.

The president added that more work still needs to be done to further increase the country’s production of crude oil.

The oilfields in West Karoun are Yadavaran, North Azadegan, South Azadegan, North Yaran, and South Yaran. The biggest among all are South Azadegan and Yadavaran which are shared with Iraq’s Majnoon and Sinbad fields, respectively.

Officials have already emphasized that a long-term plan has been devised to increase production from the fields to above one million bpd.

Iran has approved a new oil contract model to lure foreign investors, although the details have not been made public.

France’s Total SA reached an initial agreement to develop a natural gas field in Iran last week, becoming the first international oil company to sign a deal under the new energy contracts.

Foreign investment

Elsewhere in his remarks, President Rouhani said foreign investment is needed for full prosperity in the post-sanctions era.

“The nuclear deal created a new situation that ushered in fresh breathing air for Iran,” Rouhani said. “The oil industry has been a leading body in taking advantage of the new opportunities.”

“In the post-sanctions era, many said it would take years before Iran’s oil production could reach 2 million barrels per a day, but within a few months, the hardworking managers and engineers at the oil industry worked miracles and returned the country’s production to the level before the sanctions were imposed,” he said.

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