Iran is poised to sign six contracts for the development of eight new oil and gas projects.
The contracts are worth a combined $14bn of investment and the projects will add a total of 390,000 b/d of crude capacity and 30mn m³/d of gas capacity, government spokesman Ali Bahadori-Jahromi said. The deals are due to be signed before the end of the current Iranian year on 20 March, although Tehran has given no timeframe for completion of the projects.
State-owned entities currently dominate Iran's upstream sector, but most of the six new contracts will be signed with private-sector companies, Bahadori-Jahromi said. The new projects will not only help grow production but will also boost exports and Iran's foreign exchange earnings, according to Iranian oil minister Javad Owji.
News of the upcoming contract awards comes as Iran starts production from seven projects in its western Khuzestan oil and gas heartland this week. These have a combined 150,000 b/d of crude capacity and 28mn m³/d of gas capacity, and they are a mix of greenfield and brownfield projects.
They comprise the 2.15bn bl Sohrab oil field, where Iran is gradually raising output to 30,000 b/d, an expansion of the Cheshme Khosh oil field, where Russian company ZN-Vostok has lifted output to 62,000 b/d from 48,000 b/d in 2018, additional output at the Dalpari and West Paydar fields, phase 16 of the giant offshore South Pars gas field and 60 new wells at the South Azadegan field. The project at South Azadegan has added 50,000 b/d to the field's crude capacity, lifting it to around 240,000 b/d, according to Argus estimates.
The latest increments take Iran's total crude capacity above 3.9mn b/d from 3.8mn b/d late last year. But production remains well below that at around 3.2mn b/d as the country continues to contend with US sanctions which deter many of its traditional customers from importing Iranian oil.
The next batch of projects would lift crude capacity further to 4.2mn-4.3mn b/d, a level Iran has not produced at sustainably for several decades. Longer term, Iran has very ambitious plans to boost its crude capacity to 5.7mn b/d by 2028, but it will struggle to deliver anything close to that unless sanctions are lifted soon and foreign companies and investment are allowed back to the country.
