China Quietly Ramps Up Oil Production In Iran
The supergiant Azadegan oil field, comprising major north and south sites, is as important to Iran’s overall strategic plan to survive the current sanctions environment and to prosper when they are lifted as the flagship South Pars supergiant gas field and the added-value products of its petrochemicals sector. Last week Iran’s Petroleum Engineering and Development Company (PEDEC) announced that five new development wells and an appraisal well are to be spudded in North Azadegan to maintain current production levels. OilPrice.com understands from various senior energy sources in Iran that this is only part of the picture, with much bigger plans having been agreed for rollout in the coming six months with the help of China and Russia.
Located around 80 kilometres west of Ahvaz, close to the Iraqi border, the entire 900 square kilometre Azadegan field is the third-largest hydrocarbon reserve in the world after the Ghawar oil field in Saudi Arabia and the Burgan oil field in Kuwait. Its total reserves are estimated at about 42 billion barrels of oil, with around 7 billion barrels currently deemed recoverable. The first exploration well was drilled in 1976 but, despite its potential, a long lead time across the four main layers – Sarvak, Kazhdomi, Godvan, and Fahilan – of the site has meant that the pace of production has been slower than at many neighbouring fields, especially those over the border in Iraq.
A key reason for this was the attitude of Chinese firms active in Iran around that time, which can be broadly characterised as doing the minimum necessary to generate some oil flows from the fields back into China whilst not spending too much money.
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