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Prepared to Drill
Much has been reported on the south Iranian oil and gas
reserves. But the latest studies indicate that oil reserves in northern Iran, the Caspian
Sea in particular, are worth a study. That is where a person like Peter Sharland can best
comment.
A geologist from London University,
Peter Sharland worked from 1983 till 1988 for an independent American company called
Louisiana Land and Exploration, with activities in Europe and North Africa.
He then joined BP Exploration in 1988 to learn more about global geo-science. Sharland
joined LASMO in 1996 with responsibilities for exploration activity in the Middle East.
His current position is Head of Subsurface for the Middle East and Caspian Business Units.
He is also the project manager for LASMO’s Caspian work with partners Shell, Veba and
NIOC. In a recent visit to Iran, Sharland covered four topics addressing his audience in
the oil & gas sector:
The issues facing the oil companies in
the South Caspian
The joint exploration study by the south
Caspian consortium
Some assessment of Iran’s oil and
gas potential
Broader opportunities presented to Iran
by South Caspian oil and gas
Iran International talked to LASMO’s
Middle East managing director on the status of their south Caspian blocks, buy-back
contractual arrangement and the south Caspian oil market:
| In the
long term, south Caspian oil can meet the refining capacity available in Tabriz, Isfahan,
Arak and Tehran |
Under the exploration study agreement
with KEPCO and NIOC, we have an option to take up to six blocks and we have an opportunity
to negotiate the exploration contracts form. There is discussion presently underway with
NIOC. LASMO has the willingness and time to be able to reach agreements with NIOC about
the phase two of the work, which is exploration activity, requiring 3D seismic and the
drilling of wells in those blocks.
Buy-Back Again?: At the moment, “buy-back” is the only legally
acceptable contract by Iranian law. We are starting on that basis to work with NIOC to see
whether the buy-back is appropriate for Caspian exploration. The challenges of the
buy-back are to try to define the petroleum because under the buy-back, we have to agree
on a scope of work for the oil which is ready to be discovered. But we have not discovered
any oil yet. So until we reach that point, it is difficult to see how we can use the
buy-back contract to fit it into the current discussions.
There is a large consortium of companies
currently working on the exploration and gas studies to help NIOC and the Islamic Republic
of Iran decide how to best use their gas reserves. I believe they include nine companies
of which LASMO is one. The challenge for activities in the Caspian is to ensure that the
contract is properly negotiated and all elements of both gas and oil are contained within
the contract. If we are discovering gas rather than oil we can still monetize the
petroleum defined.
Caspian Oil Markets: The most likely market for the south Caspian oil is now
in north Iran. NIOC is supplying north Iran from the Persian Gulf fields and this is a
relatively expensive process. If there is oil available in the southern Caspian which can
meet the domestic and industrial needs of north Iran, then the country will be able to
export that part of the Persian Gulf oil which is now being used internally.
Iranian oil authorities have mentioned that
680,000 barrels/day of refining capacity is available in Tabriz, Isfahan, Arak and Tehran.
We believe that volumes available in south Caspian can meet this capacity in the long term
and Iran would be able to sweep out the crude that at present comes off in the Persian
Gulf. |
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