Baku, Azerbaijan, April 19
By Fatih Karimov - Trend:
China's CNPC is on the verge of quitting Iran's South Azadegan oil field development project, Iran's Tasnim news agency reported on April 19.
Iran issued an ultimatum to CNPC on February 18 over its continuous delays in developing the South Azadegan oil field.
At the time, Iranian Oil Minister Bijan Namdar Zanganeh said, "If this trend continues, we will expel CNPC from the project."
CNPC had been awarded with developing North Pars oil field, Yadavaran joint oil field, North and South Azadegan fields, and the Phase 11 of the South Pars gas field.
Due to its repeated delays, the company has been expelled from the South Pars and the North Pars projects and they are on the verge of being expelled from the South Azadegan project.
Iraq, which owns the other half the South Azadegan joint oil field, started producing 175,000 barrels of oil per day at the field in September 2013.
While Iran's production rate stands at 50,000 barrel per day, Baghdad plans to increase its production at the field up to 400,000 barrels per day in the near future.
CNPC has been in charge of developing the field for seven years. However, only seven out of the projected 185 wells of the first phase of the oilfield have been drilled so far, the managing director of Iran's Petroleum Engineering and Development Company (PEDEC), Abdolreza Haji Hosseinnejad said in February.
"The project is only seven percent complete," he noted.
"CNPC was supposed to use 25 drilling rigs at the joint oilfield, but currently only five drilling rigs are active there," he continued.
The oilfield is projected to produce 320,000 barrels of oil per day.
In 2009, CNPC signed a memorandum of understanding with National Iranian Oil Co, promising to pay 90 percent of development costs for the South Azadegan oil field while taking ownership of a 70 percent stake.
An Iranian official said the project needed investment of up to $2.5 billion, Reuters reported.