MOSCOW (Dispatches) -
Irrespective of how quickly a new iteration of the Joint Comprehensive Plan of Action (JCPOA) – ‘nuclear deal’ – is signed between Iran and the U.S., plus the remainder of the P5+1 group of nations that agreed the original version (the UK, France, Russia, China plus Germany), Tehran is now looking to increase its oil output from all of the fields that constitute its massive West Karoun cluster.
With over 67 billion barrels of oil in place across the West Karoun oil fields, Iran’s Petroleum Ministry says that each one percent improvement in the rate of recovery would increase recoverable reserves by 670 million barrels or some $33 billion in revenues even with oil at $50 a barrel.
This output expansion drive includes some of the fields that are less well known than the supergiant West Karoun sites of Azadegan (North and South), Yaran (North and South), and Yadavaran, but which nonetheless may together substantially contribute to the addition of at least another one million barrels per day (bpd) of crude oil output for Iran within a very short time.
One such a field is Darquain (or ‘Darkhoein’), located 45 kilometers north of the city of Khorramshahr and 100 kilometers south of the oil-rich city of Ahvaz, in the Khuzestan province.
With an estimated minimum five billion barrels of oil in place, 1.3 billion barrels of which are deemed recoverable, the field was initially developed by Italy’s ENI based on its successful 2001 buyback contract tender, together with local partner Naftiran Intertrade.
Production of the light oil (API gravity of 39) began in 2005, with Darquin-1, and the Darquain-2 development followed in early 2011. Both of these have been focused on the exploitation of the easier-to-excavate parts of the Fahlyan reservoir formation, with the resultant oil flows being delivered into the Ahvaz-Abadan oil pipeline.
The next phase of development will focus on developing the more challenging parts of the Fahlyan layer by dint of gas injection, plus opening up the Ilam and Sarvak reservoirs, with the latter of these also being subject to water and gas injection enhanced recovery techniques. To further optimize the recovery rate across these layers in Phase 3, there will be a rollout of another 31 oil wells, six gas injection wells, crude oil processing facilities including pipelines, processing installations, gas compressors, crude oil storage tanks and roads. After this development program has been completed, crude oil output from the Darquain site will total at minimum 220,000 bpd, a senior oil sector source who works closely with Iran’s Petroleum Ministry exclusively told OilPrice.com last week.
To roll out Phase 3 in full, together with concomitant enhancements to existing operations at Darquain, will require investment of around $1.5 billion but both China and Russia have already made it clear to Iran that they will cover any costs associated with the exploration and development of the West Karoun oil fields.
Prior to the re-imposition of U.S. sanctions on Iran in May 2018, the contract for Darquain had been one of the $30 billion of ‘strategic’ energy deals agreed by Iran with Russia during President Vladimir Putin’s visit to Tehran in November 2017. These were to involve the state-owned Russian heavyweights Rosneft (oil) and Gazprom (gas), according to the Iran source. Subsequent to signing of the landmark 25-year deal signed with China in 2019, though, Russia agreed to make way for China to take the lead in West Karoun, as part of the division of key Iranian oil and gas assets between the two powers.