April 19, 2019
Developing oilfields in the southern Caspian may be so expensive that it isn’t worthwhile for Iran to try to get control of the southern seabed, according to a new report.
For more than a quarter-century, Iran has been battling over the Caspian in an effort to get 20 percent of the seabed versus the 13 percent it would get under a normal division of the Caspian. The new analysis questions whether that is worth the effort.
Focusing on energy swap operations across the Caspian Sea is much more cost-effective than extracting oil and gas from its deepwater hydrocarbon deposits, the report says.
According to the Iranian Students News Agency (ISNA), although the National Iranian Oil Company is experienced enough to tap into offshore reserves in the Persian Gulf, it is still deprived of the cutting-edge technical know-how needed to drill at a depth of 1,000 meters, which is what is faced in the southwestern Caspian.
The Financial Tribune said the cost of producing oil in the southern Caspian is guesstimated to be three to four times greater than the costs in the Persian Gulf.
As a result, it says, many energy experts, including Oil Minister Bijan Namdar-Zanganeh, believe that concentrating on swap deals in the region is more economical than extracting oil and gas.
Under oil swaps, other Caspian coastal states ship their oil to Nekka on Iran’s Caspian coast. That oil is then piped to refineries in northern Iran and sold across northern Iran. Meanwhile, Iran sells an equivalent amount of oil from southern Iranian oilfields at Kharg Island on the account of the Caspian coastal states.
According to Hamid Hossaini, director of the Iranian Oil Pipeline and Telecommunications Company, “The [Nekka] pipeline’s current transfer capacity stands at 370,000 barrels per day, yet plans are in place to raise it to as many as 500,000 barrels a day by the end of December before increasing it to 600,000 barrels per day in the future.”
According to US Energy Information Administration estimates, there isn’t much oil in the southern end of the Caspian. It estimates deposits in the southern part of the Caspian Sea that all the other coastal state agrees belongs to Iran at just 500 million barrels of crude, or about 135 days worth of Iran’s current national production.
Reportedly, oil reserves in the other littoral states stand at 1.6 billion barrels in Russia, 5.8 billion in Azerbaijan, 1 billion in Turkmenistan and a whopping 32 billion barrels in Kazakhstan.
