(MENAFNEditorial) The market in Iran for workboat operators and energy service companies holds great potential but there are many obstacles ahead, delegates at the Iran Energy Focus session at the Seatrade Offshore Marine Workboats conference said yesterday (Tuesday 6 October 2015) at the Abu Dhabi National Exhibition Centre (ADNEC).
The panel discussion entitled, "Iran Energy Focus: Senior Executive Briefing" sparked an interesting debate, as industry specialists dicussed how the regional oil & gas industry can participate in the Iranian market, once sanctions have been lifted.
Just one of several key challenges of tapping into these lucrative markets will be abiding by Iran's 51% local ownership rules. Dr Amir Kordvani, a lawyer with Clyde & Co, said: "This could mean that companies operating vessels in Iranian waters would need to have a local office with a minimum of five employees on the ground. Other requirements remain unclear at this point, however."
His colleague, Patrick Murphy, revealed that even if the sanctions were lifted on the likely "implementation day" – currently 15 December 2015 – some US sanctions will remain in place. "These will prevent US personnel from undertaking transactions in Iran. EU sanctions, however, would be lifted completely. Meanwhile counterparty risk is another potential area of concern," he said.
Dr Manouchehr Takin, an international oil and energy consultant, explained that Iran still has huge reserves of oil for which new technologies are needed to raise production levels. However, Takin also noted the political challenges of Iran developing shared oil fields with its various neighbours, which the Iranian government now considers a national priority.
"After more than a decade of sanctions, Iran's energy sector has lost a large proportion of its global market share to other OPEC countries. Iran recognises that it needs international partners, particularly as decades of under investment and aging technologies have profoundly impacted output," said Emma Howell, Head of Marketing, Seatrade.
On a positive note, the rewards could be significant. Iran holds about 10% of proven world energy supplies and in terms of offshore gas reserves, South Pars, the geographical extension of the North Field into Iran's territorial waters in the Persian Gulf, holds 635tcf of estimated recoverable gas reserves, making it the world's second biggest offshore gas project.
Its 12th development phase was inaugurated in March 2015 at a cost of $7.5 billion. Once fully operational it will produce 80 million cubic metres of gas and 120,000 barrels of gas condensates every day, earning Iran daily revenues of $17.5 million.
The South Pars oil layer is estimated to hold 7 billion barrels of oil in reserves. According to the NIOC, Petroleum Ministry officials have said that up to 35,000 barrels per day of oil could be recovered from the layer in the first phase.
The NIOC notes that Mehdi Hosseini, head of Iranian Ministry of Petroleum's Oil Contracts Revision Committee, said earlier in August that Iran hoped to boost crude production to 5.7 million barrels a day.
Iran's Kish gas project located below the Kish Island in Persian Gulf with estimated recoverable gas reserves of 66tcf, is the world's fifth largest offshore gas project and the second biggest offshore gas field in Iran after South Pars.
The North Pars gas field, located 120km south east of Bushehr in water depths of 2m to 30m in the Persian Gulf, Iran, contains recoverable gas reserves of 47.2tcf, making it the world's sixth biggest gas project under development.
The field is being freshly developed with a four-phase development plan targeting 3.6 billion cubic feet of gas production per day. A $16 billion contract was signed between NIOC and China National Offshore Oil Corporation (CNOOC) in 2007 to build a 20 million tonnes per annum (mtpa) LNG project at North Pars.
"However, as Iran and the international community continue down the path of consensus and agreement on formerly contentious and divisive issues, there are increasingly upbeat and clear statements emanating from Iran's state energy producers that international producers and contractors need to be ready for upcoming work and tenders in Iran," said Howell.
Seatrade Offshore Marine & Work Boats 2015 is set to build on the success of the 2013 exhibition and conference, which generated US$850 million in onsite orders; welcomed almost 5,000 participants (a 46% increase over 2011) from 54 countries, 211 exhibiting companies and increased its floor space by 8% to nearly 4,000 square metres. The 2015 showcase has already sold 80% of the 4,680 square metres of exhibition space reserved this year, signing up over 165 exhibitors to date.
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