By the OGJ Online Staff
HOUSTON, July 2 -- ENI SPA and Naftiran Intertrade Co. signed a $1 billion buyback contract with National Iranian Oil Co. to develop onshore field Darquain in the Iranian province of Kuzestan.
This is the first test of US President George W. Bush's resolve to apply the Iran-Libya Sanctions Act.
The act, up for renewal on Capitol Hill, provides for punishment of foreign companies that invest more than $20 million/year in Iran or Libya. The Darquain deal is being closely watched by industry.
The partners expect to invest $550 million in the project over 65 months, said ENI. It will operate the development phase with 60%, and National Iranian Oil Co. the production phase with 40%.
In the first phase of development, the partners will drill eight producing wells, build plants for oil treatment, reinject associated gas, and ship 50,000 b/d. About $180 million will be spent on this phase. In the second phase, the partners will expand gas injection facilities and produce up to 160,000 b/d.
ENI already owns holdings in the South Pars gas field and in the Doroud and Balal oil fields.
Vittorio Mincato, CEO of ENI, said this was the first onshore oil project awarded to a foreign company.
The $1 billion in investment will be paid back through revenues over 6 years.
Darquain, which lies 45 km northeast of Abadan, has estimated reserves of 289 million bbl of oil. The field's three wells were abandoned because of poor permeability. NIOC hopes to restart production through enhanced oil recovery techniques.
Darquain is expected to produce up to 200,000 b/d of oil with the installation of facilities over 6-7 years (OGJ Online, May 30, 2000).