New Gas Hub in Northern Iran

According to Ali Osouli, CEO of KEPCO, if the initial estimates are confirmed and exploration success is achieved in the Chalous structure, the Irani

 

sector of the Caspian Sea will play a significant role in gas exports to Europe in the near future, in which case Iran's new gas hub will be formed in the north to let Iran supply 20% of Europe's gas needs from this region.

KEPCO eyes “Chalous Superstructure Drilling and Exploration” project over the coming two years. Chalous structure is the second largest one in the Caspian Sea, just behind the Alborz structure. Based on various studies conducted on that structure, it is estimated to hold gas reserves equivalent to one-fourth of the giant South Pars gas field. That would put Chalous in 10th position in the world in terms of gas reserves.   

According to estimates, this structure has a production capacity equivalent to 11 phases of South Pars. If the estimates are accurate and the operation to explore the Chalous structure proves successful, the volume of recoverable gas from this structure alone would be 1.5 times the total recoverable gas in Azerbaijan and equivalent of 30% of the total recoverable gas in the Caspian Sea. On the other hand, based on available evidence, this structure can also have significant oil reserves. Chalous structure may be compared with giant oil and gas fields in southern Iran in terms of in-place and recoverable hydrocarbon deposits. Following SCSC and SMDP studies, exploration drilling has to begin in Chalous in the shortest possible time. Immediately after exploration, long-term well testing will be carried out to make a proper assessment of recovery from this reservoir in order to facilitate formulation of the best development plan for the field.

This concordance of results and evaluations has led KEPCO to start its exploration activities in the Chalous structure in the best possible way by benefiting from the maximum existing capacities and mark a turning point in the exploration of huge oil and gas resources in northern Iran. 

 

Drilling in Roudsar Geophysical Structure

But another priority for exploration drilling is the Roudsar geophysical structure located in the shallow southern part of the Caspian Sea and separated from Ramsar structure (Ramsar structure is located in the deep part of the sea).

Emad Hosseini, Chairman of KEPCO Board, said hydrocarbon deposits in the Roudsar structure and their connection with the larger Ramsar structure may prove the high hydrocarbon capacity in this big structure.

KEPCO has defined this project with a comprehensive and strategic vision. Due to the proximity of Roudsar structure to the shore and the shallow water and in light of the experience of the Iranian petroleum industry in the shallow waters of the Persian Gulf, exploration operations of the Roudsar structure would carry the minimum risk. On the other hand, using the capacity of the private sector in the Caspian Sea in line with securing national interests has been seriously considered by KEPCO. Therefore, efforts will be made to help the private sector serve Iran's petroleum industry in oil and gas recovery in the north.

Iran’s neighbors are well aware of the high potential of gas reserves in the southern Caspian basin. That is why Azerbaijan Republic has put into operation the Heydar Aliyev semi-submersible rig at a cost of over $1 billion over recent years.

At present, Iran is operating the Amirkabir semi-submersible rig and three Caspian support vessels in the Caspian Sea. It is said that foreign companies spend $100 to $150 million to drill wells equivalent to Chalous’s proposed well. But thanks to KEPCO’s fleet, exploration will cost National Iranian Oil Company (NIOC) much less. That is because of the high value of this fleet that KEPCO considers approval of exploration drilling in the Chalous structure to be a smart decision pursuing national interests. 

Hosseini also said that there is huge amount of gas in Gorgan Plain. He said the data gathered from 16 wells drilled in this area along with studies carried out indicate the necessity of changing technical approach vis-à-vis liquid hydrocarbon potential in the southern Caspian basin. The results obtained from drilling the Hirkan-1 and Qezel Tappeh-3 exploration wells would provide the final conclusion. 

Seismic Experience

Meantime, with a view to integrating seismic data in the southern Caspian basin and finding the best deep drilling location, KEPCO eyes seismic survey in the offshore-onshore zone in the east of the Caspian Sea.

This project will be the beginning of creating a seismic experience in the challenging areas of sea-land transfer of the Caspian Sea, which is very important in light of the existing capacities in these coasts.  

But the issue of energy needs in the northern regions of the country is so important that it also justifies high-risk upstream operations in the Gorgan Plain. Hosseini said that seismic survey covering 830km would create short-term employment first, but long-term employment would prove successful following exploration drilling operations. 

Amir Kabir Rig Operation and Maintenance 

Another project approved by the NIOC Board of Directors is the project for “operating and maintenance of the Amir Kabir Iran semi-submersible rig and support vessels for operation with minimal reparation”.

Osouli referred to studies conducted by Iranian and foreign companies proving huge oil and gas in the Iranian sector of the Caspian Sea, saying NIOC, relying on such data, eyes manufacturing of equipment or drilling, exploration and support in the landlocked lake. The outcome of this national investment has been the construction of the Amir-Kabir rig, which was the largest drilling rig in the Middle East when it was built. Amir-Kabir facilitated oil discovery in the deep waters of the Sardar-e Jangal structure.

The oil discovered in Sardar-e Jangal (2 billion barrels of oil in place) has helped Iran become a proprietor of deep-water technologies and largely increased the exploration value of structures located in the Iranian sector of the Caspian Sea. That is why KEPCO dealt with the fleet management professionally, and significantly cut the costs for the maintenance and overhaul of the Amir-Kabir rig and Caspian vessels.

An Assaluyeh in North

Osouli touched on the potential of investment attraction in the Caspian Sea oil and gas sector, saying: “This area connects Central Asian and Caucasus nations to the Middle East. Other advantages of this area include appropriate economic potentialities, big market in the country and the region, young, specialized and creative human capital, huge oil and gas reserves along with easy access to high seas and being located on the main transit route of the region and cultural affinity between Iran and northern neighbors.”

Osouli said 675km of Caspian Sea coasts lay in Iran’s territory, adding that the Caspian Sea is a key energy zone, coming after the Middle East and Siberia.

“In addition to Iran’s unique features for delivering neighbors’ energy to the rest of the world, in case of successful exploration operation in the Chalous structure and the accuracy of estimates, the Iranian sector of the Caspian Sea will become the world’s new energy hub, which would have the potential to supply 20% of Europe’s energy needs. That would mean attracting major foreign investment,” he said.

According to him, Iran has the safest route for oil and gas exports with facilities such as oil and gas facilities, port facilities, refineries and oil and gas pipeline networks, is the most suitable option for gas exports to the East and West, and based on forecasts, if exploration drilling is successful in the Chalous structure, the northern version of Assaluyeh in Iran will be on its way.

It is worth mentioning that the Caspian Sea is currently one of the most important sources of crude oil and natural gas in the world and plays a very important role in supplying energy to countries around the world. The Caspian Sea, with 3 to 4 percent of proven crude oil reserves and about 6 to 7 percent of the world’s proven natural gas reserves, as well as proximity to the main consumer market, plays a very important role in the energy supply of the world. According to some studies, the Caspian Sea has the third largest oil and gas reserves in the world after the Middle East.   

The Center for World Energy Studies also conducted field estimates, stating that one-third of the world's untapped natural gas and crude oil resources is located on the Caspian Sea shores and waters.

It is also estimated that due to the privileged geographical location of this sea, some European countries, East Asia and even the United States, will meet up to 80% of their oil and gas needs from Caspian Sea resources. 

As a result, the five Caspian littoral states - Iran, Azerbaijan, Kazakhstan, Russia and Turkmenistan - have redoubled their efforts in recent years to exploit these resources.

According to estimates, Iran’s geographical location allows the country to receive more energy resources from the Caspian littoral states and deliver them to customers in the Persian Gulf. That is because none of the countries adjacent to the Caspian Sea has the privileged geographical position of Iran in the transit of Caspian oil and gas.

Iran’s increased cooperation with Central and West Asian countries in the oil and gas sector is another opportunity stemming from proximity to the Caspian Sea. Enhanced cooperation increases the economic solidarity of the countries in the region and leads to Iran’s economic growth.