Iran awards key Sohrab field development to local firm

Market: Crude oil
07/02/22

Iran's state-owned NIOC has awarded an $800mn contract to local upstream contractor Dana Energy to develop the 2bn bl Sohrab oil field in the country's western Khuzestan oil and gas heartland.

Sohrab is one of several fields that straddle Iran's border with Iraq. These and the other fields that Iran shares with its neighbors in the Mideast Gulf have long played a key part in Tehran's efforts to expand its crude output capacity.

This contract seemingly builds on a non-binding agreement that was signed between the two companies almost a decade ago. But the on-again, off-again western sanctions on Iran over this period, and the financial constraints that they brought, left them unable to progress to a final agreement until now.

Over the contract's 20-year duration, Dana Energy has committed to produce 160mn bl from the field and to raise production to a plateau of 30,000 b/d, NIOC said. Iran's oil ministry said the field holds 16°API crude in the Ilam layer, 17.5°API crude in the Sarvak layer, 31°API crude in the Kajdomi layer and 35°API in the Gadvan layer.

The project will be developed under the terms of the Iran Petroleum Contract (IPC), the upstream investment contract that Tehran rolled out in late 2016 in anticipation of renewed foreign investment following the lifting of nuclear-related sanctions that came with the signing of the 2015 Iran nuclear deal. Iran only managed to close a handful of deals under the IPC framework before then US president Donald Trump reimposed sanctions in 2018.

Neither NOC nor Dana Energy discloses how long it would take for the Sohrab field to be developed. The 2012 plan envisaged development taking between 48 and 52 months.

Sohrab is located northwest of Ahvaz in Khuzestan. NIOC says the field shares a reservoir with the 1bn bl Huwaiza field in Iraq, which Iraqi state-owned Misan Oil (MOC) began to develop in 2017.

By Nader Itayim

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