Iran makes huge oil find near Iraq border

Iran has discovered 30 billion barrels of oil in place at a southwestern oilfield that borders Iraq, the Jomhuri-ye Eslami newspaper reported on Tuesday.

“An Iranian company along with a Chinese company are preparing the ground for exploration of oil in the Arvand-Kenar field that has 30 billion barrels of oil in place,” the daily quoted Latif Hayayi Ahvazi, governor of Arvand-Kenar town, as saying.

Average recovery factors are between 20 and 50 percent of oil in place, so the Arvand-Kenar field could boost Iran’s proven reserves by as much as 15 billion barrels, according to Reuters’ calculations.

Oil officials contacted by Reuters were not available for immediate comment on Tuesday.

Iran has the world’s third-largest proven reserves at nearly 138 billion barrels or over 10 percent of the world’s total, according to BP’s 2010 statistical review.

The report did not name the Chinese company, or say how much of the oil in place at the field Iran would be able to produce.

One exploration well has already been completed at Arvand-Kenar, and two more were under way, an Iranian lawmaker was reported as saying by Jomhuri-ye Eslami.

“The first well has been drilled and the preliminary stages of digging two other wells in the field have started,” said lawmaker Hossein Dehdashti, a member of parliament’s Energy committee.

Iran has increasingly turned to state-owned oil firms from energy-hungry countries such as China for investment in its energy sector. The need to secure future supplies to feed rapidly growing economies has made Chinese and other state-run Asian firms less susceptible to political pressure from the United States and its allies.

Iran is the world’s fifth-largest oil exporter, but western oil firms have slowly reduced their presence in the country due to U.S. political pressure that aims to isolate Iran over its nuclear programme.

The West fears Iran aims to develop nuclear weapons, while Iran says it needs nuclear power generation to meet domestic energy demand.

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Still, Asian firms sometimes lack the technology to implement the oil and gas projects Tehran would like to develop. Iran’s plans to become one of the world’s largest gas exporters have been frustrated due to its inability to access technology to chill gas for export as liquefied natural gas (LNG).

Royal Dutch Shell and Total are among the firms that have put investment in Iran’s giant South Pars field on hold due to political pressure.

Existing U.S. sanctions on Iran already prevent U.S. firms from investing in its oil and gas industry and allow the U.S. to penalise foreign firms that invest more than $20 million in the country.

Parts of Iran’s oil and gas industry could be targeted by an extra layer of European Union sanctions, according to a document prepared for EU leaders.

Iran has continued developing the field to meet domestic demand.

“We should not be dependent on others (to develop our energy sector). Those who are moody and … obey their masters’ orders not to work with Iran,” President Mahmoud Ahmadinejad said on state television.

The comment followed a deal to develop six phases of Iran’s giant South Pars gas field was signed between National Iranian Oil Co. and some Iranian companies, including a company affiliated to the elite Revolutionary Guards.

The value of the deals was around $21 billion, Ahmadinejad said. Total investment in developing South Pars would reach $50 billion over the next 40 months, he added.

The new deals were for phases 13, 14, 19, 22, 23 and 24 of the field, state television reported.

“By developing these fields, Iran’s production of natural gas will increase 140 million cubic metres per day (4.942 billion cfd),” state television said.

South Pars is part of the world’s largest reservoir of gas not associated with oil production. Iran shares the field with Qatar, where it is known as the North Field. Qatar has developed its side of the field with investment from international energy companies and has become the world’s largest exporter of LNG.

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