Iran Struggles To Develop Shared Oil Field With Qatar

The South Pars oil layer � a structure that Iran shares with Qatar, where it is known as al-Shaheen � is producing less than the target of 35,000 b/d of crude, the oil department of the General Inspection Organization of Iran has reported. MEES learns that commercial production has not started. The development contractor, state-owned oil services firm PetroIran Development Company (Pedco), is thought to lack the know how to develop this technologically challenging field, given the sanctions imposed on Iran. The first phase of the project � to produce 35,000 b/d � was scheduled for completion more than three years ago. The National Iranian Oil Company (NIOC) has studied a proposal to lift output to 54,000 b/d (MEES, 26 July 2010) � down from the original target of 100,000 b/d.

It is extremely difficult for Iran to successfully develop its part of the 6bn barrels reservoir. To develop al-Shaheen, Maersk in 2008 had to drill what it says is the world�s longest well at 12.3km, which contained a 10.9km horizontal section and penetrates a reservoir which is as thin as one meter. The complexity of the project, international sanctions against Iran�s oil industry, and Iran�s patchy record for organizing and delivering energy projects, suggest that the 35,000 b/d phase one target will take some time to hit.

Iran has oil fields that are easier to develop, but in its current Five-Year Plan NIOC has given priority to developing shared fields (MEES, 9 January). Iranian media at times carry reports of Qatari extraction of gas and oil depleting Iranian reserves. Qatar�s rigs operate as little as 500ms from the offshore boundary and al-Shaheen has been producing at about 300,000 b/d for several years. In 2010 Maersk and Qatar Petroleum celebrated the production landmark of 1bn barrels.

If Iran could develop the reservoir, which lies underneath the South Pars gas field, it may impact the length of time that Qatar can maintain production on its side at its plateau rate. Al-Shaheen is Qatar�s swing producer, whose output is more than one third of Qatar�s 730,000 b/d production � a share which increases as the other major fields� output declines. Maersk, which operates the field, has halted plans to boost production capacity to 525,000 b/d from 450,000 b/d. Qatar�s Minister of Energy and Industry Muhammad al-Sada has pledged to reverse Qatar�s oil output decline (MEES, 21 May).

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