By the OGJ Online Staff
HOUSTON, Aug.1 -- Iranian government officials are negotiating a $359 million buy-back deal with PetroIran Development Co. to triple production from two offshore oil fields to 150,000 b/d by the end of 2005, Middle East sources said Wednesday.
Bijan Namdar Zangeneh, Iran's petroleum minister, earlier reported that PetroIran would join with BHP Billiton Ltd., the Australian mining and energy conglomerate, to develop the two fields under a deal that would impose penalties if the developers fail to achieve the 150,000 b/d target.
PetroIran is a subsidiary of the National Iranian Oil Co. acting as operator of certain offshore Iranian fields under a buy-back investment system devised to develop new fields and rebuild others devastated during the 1980-1989 Iran-Iraq war. Under that system, investing companies are repaid in oil and natural gas, recouping the cost of their investment plus an agreed return.
Abolqasem Hassani, head of Iran's Continental Shelf Oil Co., was quoted by Iranian media as saying this latest project would increase production from offshore Foroozan field to 105,000 b/d. Other sources said the development project also would increase production from Esfandiar field to 25,000 b/d.
Sources describe Esfandiar as an extension of Lulu field in the Saudi-Kuwait Neutral zone, while Foroozan straddles the water boundary with Saudi Arabia's Marjan field.
Negotiations are underway and the deal is expected to be signed within a month, officials said.
Iran has already has signed buy-back deals totaling $5.2 billion to increase the country's offshore oil production to 1.2 million b/d from 660,000 b/d currently, Hassani said.