Iran has accelerated drilling of its largest oilfield which it shares with Iraq in order to catch up with its western neighbor in production, an energy official has said.
The National Iranian Drilling Company (NIDC) has completed drilling of six wells at the South Azadegan field since taking over from the state-run China National Petroleum Corporation (CNPC) which had its contract cancelled in May 2014 due to repeated delays.
Iraq started producing 210,000 barrels per day from the field which it calls Majnoon in April 2014. The country has awarded the field to a consortium led by the Royal Dutch Shell, targeting a production plateau of 1.8 million bpd.
Manouchehr Assadi, in charge of the South Azadegan drilling, said six more wells are nearing completion, with drilling underway in a further six.
The NIDC has rushed seven heavy rigs to the super-giant field, which have helped drilling work progress over 30%, he said. Officials say early production from the field stands at 50,000 bpd. They hope to make up for the delays and setbacks over the next two years.
Iran first awarded the development of South Azadegan to Japan’s Inpex in 2001 but had to terminate it after five years due to the company’s inaction.
In Oct. 2009, NIOC signed a $2.5 billion contract with CNPC to produce 320,000 bpd of oil and 197 million cubic feet per day of gas within 52 months and ultimately raise it to 600,000 bpd.
According to the Iranian contractor, after four years the Chinese side had drilled only two wells, which were still unfinished, of the originally planned 185 wells.
Iran’s Minister of Petroleum Bijan Zangeneh ordered termination of the contract after CNPC was given one month extra following a 90-day ultimatum to work on the project.
Azadegan is the world's third largest oilfield with in-place reserves of about 33.2 billion barrels and recoverable resources of about 6 billion barrels.
Chinese energy companies were reportedly instructed in 2010 to slow or stop work in Iran because of pressures from the US which has a sanctions regime in place against Tehran.
In 2013, Iran cancelled CNPC’s contract to develop Phase 11 of the South Pars natural gas field for similar reasons.
The country, however, has let the Chinese company retain the $2 billion North Azadegan oilfield project for the time being.
Chinese companies are actively involved in energy development projects in Iraq, which also shares Yadavaran (Sinbad) and Azar (Badra) oilfields with Iran.
Several officials have said while dragging its feet on Iranian projects, the Chinese company had passed data about Iran’s fields to the Iraqis.