its neighbors in production from shared oil and gasfields in the Persian Gulf, raising a long-held fear in Iran that neighbors will suck everything out of shared fields before Iran ever gets to them.
Abdol-Mohammad Delparish, the NIOC planning manager, said Iran is extracting almost as much as Iraq from the fields shared with that country, but is way behind its neighbors in exploiting shared fields under the Persian Gulf.
He said, for example, that Qatar has already extracted considerable gas from the shared Salman field while Iran has extracted nothing there. In the shared gasfield known as South Pars in Iran and the North Field in Qatar, he said Qatar produces twice as much each day as Iran does.
Shared fields have long been a political issue in Iran because of the widespread concern that foreigners will drain those fields dry before Iran can begin pumping from them.
The main approach Iran has used to prevent that has been to try to stop neighbors from exploiting shared fields. A few years ago, Iran went so far as to occupy a small slice of Iraq to stop pumping from an oil well that was just a few hundred meters inside Iraq.
It has also refused for decades to negotiate the maritime border with Kuwait. Kuwait has sought since the end of the Iran-Iraq war in 1988 to exploit the Dora gasfield under the Persian Gulf that is shared by Kuwait, Iran and Saudi Arabia. The Saudis agreed on the maritime border almost two decades ago, but the Islamic Republic has just dragged its feet.
Since the 1990s, Oil Ministry officials have often spoken of the need to prioritize the development of shared fields, expressing something of a use-it-or-lose-it fear. But despite all the motivation to do something, little has been done beyond the heavy priority on the South Pars gasfield, which is still behind the development on the Qatari side.
In November 2010, for example, the Oil Ministry said it would make decisions on the development of all the many shared fields by Now Ruz 2011. Now Ruz 2011 came and went and Now Ruz 2012 has also come and gone with little action taken.
This very week, Ahmad Qalebani, NIOC managing director, announced that Iran will sign contracts for the developed of all its shared oil and gas fields during this Persian year.
Two years ago, in May 2010, just after Qalebani was named to head the NIOC, he said that developing oilfields shared with neighbors was one of his priorities—and that is what almost all of his predecessors also said.
Hamid-Reza Katouzian, chairman of the Majlis Energy Committee, said Iran has done hardly anything to develop shared fields for a third of a century and is shooting itself in the foot by such sluggishness.
Deputy Oil Minister Moh-sen Khojastemehr said in 2010 that to complete the development of those fields within the next five years would take $50 billion. He didn’t say where that money would come from, raising doubts about the ability to develop the fields.
Khojastemehr said the government had decided to fast-track the decision-making process and would not sit for lengthy negotiations with foreign oil firms. That implies Iran wanted to exploit the fields on its own without looking for foreign investors.
But he also said talks were underway with foreign as well as domestic firms for the development of the first such oilfield, Azar, which is shared with Iraq.
A contract for that field was finally signed last November with Iran’s Oil Industrial Engineering and Construction Co. (OIEC) for $1.9 billion. That contract was signed a week after Russia’s Gazprom was booted out of the talks for failure to meet its commitments, which usually means a firm was dragging its feet, trying to avoid putting any money down while hoping the nuclear issue would be resolved soon.
Azar is to produce 30,000 barrels a day by October 2014 and 65,000 barrels a day when fully developed on the Iranian side.
Deputy Katouzian said the problems with wrong policies and practices in the oil industry goes back to 1977, even before the revolution.
He blamed inadequate investment, wrong policies and poor decisions for slow progress throughout the oil sector.
“Unfortunately, sometimes decisions are made without taking the national interests into consideration and lead to permanent harm to the country,” he was reported by the Tehran Times as saying.
“If we compare the rate of development of Iran’s joint oil fields with other Persian Gulf regional states, we see that from 1977 onwards very little progress has been made in Iran’s part of the joint fields.”
He cited Iraq’s aggressive initiative of the last few years to bring in foreign firms to develop Iraqi oilfields, including those shared with Iran, and said this will not only “undermine our position in the world energy market, but also reduce Iran’s influence in international diplomacy,” a direct critique of President Ahmadi-nejad’s claims to have made Iran a major world power.