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Tuesday, 24 November 2015 17:15

The field is slipping through the fingers - why SOCAR and Ministry of Foreign Affairs taking no action? Featured

The field is slipping through the fingers  - why SOCAR and Ministry of Foreign Affairs taking no action?

Late in November Iran is going to present foreign investors four projects associated with oil fields in the Caspian.

Participants of the conference of new oil-gas contracts, to be hosted in Tehran on November 28-29, will be presented 4 projects on exploration, production and development including Sardar-e-Jangal field.

“Two Caspian projects will concern exploration while the rest two involve development and production”, Managing Director of the Iranian Company for Exploration and Production in the Caspian (KEPCO) Ali Osuli said”, abc.az quotes. This block of structures (“Sardar-e-Jangal in Iranian interpretation) is located approximately 180km to the north-west from Astara (to the north from the Astara-Hasangulu line) and 194km to the south-west from Neft Dashalari (Oil Rocks).  The coordinates of the structures are 38°34'30"N   51°16'18"E  according to http://wikimapia.org/22578491/Sardar-e-Jangal

 

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www.iranoilgas.com

According to a modified median line division method of the Caspian seabed, which has been adopted by most of the Caspian states (Azerbaijan, Russia, Kazakhstan and partly Turkmenistan), this block is fully located in the Azerbaijani sector. But it is not ruled out that after completion of exploration of geological features of the field and the depth of occurrence of production horizons, it may gain a cross-border status just like the Iranian South Pars field in the Persian Gulf part of which is developed by Qatar (North Field - operator Exxon).  

A sectoral method of division of the Caspian seabed and resources (the major component and disputable part of the draft convention for the legal status of the Caspian) has a long story – since the commencement of development of Azeri-Chirag-deepwater Guneshli block in 1994. Lots of options have been offered throughout this time – 10 or 15 mile zones of the national jurisdiction, the rest would be an area of common use, division of the sea when each state gets 20% and many other exotic options. But finally, the parties reached the compromise consensus on basis of the regulations of the international maritime law and the UN Convention for delimitation of inland water bodies.

Thus, as early as July 6, 1998 the Russian Federation and Kazakhstan signed an agreement on the delimitation of the seabed of the northern part of the Caspian Sea for the purposes of exercising their sovereign rights to the exploitation of its subsoil. This agreement envisages division of the Sea’s bed and subsoil on basis of the modified median line. A joint statement about principles of cooperation in the Caspian Sea was signed on January 9, 2001 during the visit of RF’s President Vladimir Putin to Baku. The text of the joint statement narrated about the method of the Caspian seabed division on basis of the median line drawn through equidistant points and modified by arrangement between the parties as well as on the basis of the generally –recognized principles of the international law and the existing practice on the Caspian. The 5th item of the statement states: “Other elements of the legal status of the Caspian Sea are supposed to be discussed at following stages”.

Later, Kazakhstan and Azerbaijan signed an agreement about delimitation of the Caspian seabed in Moscow on November 29, 2005. The document stipulates the principle of delimitation of the Caspian seabed into the national sectors along the median line which coordinates will be contained in a separate protocol. The agreements do not concern the division of sovereign rights of state territories but performance of business activities on the seabed in order to explore, develop and manage subwater and subsoil resources of the national sectors of the sea.

“A good cornerstone for accelerated settlement of most of the remained Caspian Sea issues was laid at the Astrakhan summit of the leaders of the Caspian Sates held in September 2014”, Minister of Foreign Affairs of Kazakhstan Erlan Idrisov says. In this way, the statement made by the Presidents of the Caspian States and adopted at the end of the summit, strengthened basic principles of activities of parties in the Caspian.

Apart from this, the leaders of the Caspian states adopted a common decision on one of the key elements of the Caspian Sea legal status – the delimitation of marine waters. In particular, an agreement in principle was achieved in relation to the establishment on the Caspian of a 15-nautical-miles-wide sovereign zone and of a 10-nautical-mile-wide fishing belt.

Signed within the framework of the 4th summit were also intergovernmental agreements in the field of hydrometeorology, preservation and rational use of bio resources as well as prevention of emergency situations in the Caspian Sea.

Minister of Foreign Affairs of the Republic of Kazakhstan emphasized that the initiative of the President of the Republic of Kazakhstan Nursultan Nazarbayev, offered at the 4th Caspian summit in Astrakhan and concerned the necessity for preparation of the Convention about the legal status for signing at the next summit due in 2016, was generally supported by all heads of Caspian States.

Only Iran, which still aims at 20% of the deep-water shelf resources mainly in the Azerbaijan’s sector, did not adapt to changes. It is anyhow observed in the latest actions of the Iranian side in the Caspian – at so called Sardar-e-Jangal field.

 

 

Alborz  (Amir Kabir )

What is this mysterious Sardar-e-Jangal which all confound with a well-known cross-border Azerbaijani-Turkmen oil field Kapaz-Sardar?

A new gas field in the Iranian sector of the Caspian is located 250km away from the shore, in the eastern province Mazandaran, Minister of Oil of Iran Rostam Gasemi said while visiting a semisubmersible drilling platform “Amir Kabir” in May 2012, Iranian agency Mehr writes.

 

According to him, the reserves have been revealed at a depth of 2,460m.

For the first time Iran announced about the discovery of the new oil field on May 10, Trend reports.

According to the minister, the field, containing about 50 trillion cubic feet of gas (over 1,4 trillion cubic meters) and about 10 bln barrels of oil, was revealed in the Iranian sector of the Caspian Sea in December of 2011.
Construction of the Alborz platform (later it was renamed into Amir Kabir), started as early as 2001 by the consortium including the Iranian Company SADRA and the Swiss Company GVA after a well-known military incident with BP in the Azerbaijani sector of the Caspian Sea, is of interest.

The drilling rig is fixed to the seabed by means of 8 anchors located on 4 sides of the platform. Three additional towboats are used for the maintenance of the platform. The mentioned platform drills wells in a submersible position in areas where the water depth reaches up to 1,000m. It is capable of drilling the well down to 6,000m. The overall weight of the platform totals about 14,000 tonnes. 120 people are involved in its maintenance and operation.

Official ceremony of the commissioning of the Alborz (Amir Kabir) platform took place in summer of 2009 in the presence of President Ahmadnejad. At that period the semisubmersible drilling rig was designed for drilling at Alborz block - in Azerbaijan this block is called Abiha or Araz-Alov-Sharg. The exploration operator of this block is BP whose survey vessel was unmannerly moved out from the contract area by the Iranian military motor boat in summer 2001.

Iran-Alborz was renamed into Amir-Kabir right after commissioning, Isna agency reports.

According to the made decision, an exploratory drilling should have been commenced by this platform in the waters of the Caspian Sea starting from February 11, 2010. As specialists noted, the platform was renamed as the previous name did not reflect the attention that is paid to the development of the region. Amir Kabir was a founder of the old Darolfonun University in Iran, who contributed to spread and development of technical knowledge in Iran. It is the reason why the semisubmersible platform was named after him. The total weight of the platform exceeds 14.5 thou. tonnes. Of this total, 4.5 thousand tonnes fall to the share of the technical equipment. 

Along with the construction of the semisubmersible drilling rig, the project also envisaged construction of three multipurpose auxiliary tugs named Caspian-1, Caspian -2 and Caspian -3 as well as construction of the base for performance of oil operations. One of the major achievements was the maximum use of domestic resources of the country during the construction of the platform, Iranian media noted. All stages of the construction of platform, its supply with necessary equipment and commissioning was carried out by Iranian specialists. After building the platform, Iran started possessing technologies for drilling offshore wells. Owing to this, a new field Sardar-e- Jangal was revealed.

 In April 2013 the General Director of the Oil Company “Khazar “ Ali Osuli told Mehr about signing of the agreement for construction of the second semisubmersible drilling platform, designed for development of oil and gas fields of Iran in the Caspian Sea, and said that technical features of the new platform will be similar to those of Amir Kabir platform.

It is noteworthy that Iran shares a total of 28 oil and gas fields with neighbor countries. Tehran also states that it possesses one more joint field with Iraq.

The science-research center of the parliament of Iran has also reported that the general volume of production of Iran’s neighbors from joint oil-gas fields is currently 9 times higher than Tehran’s share. Therefore, it seems like Iran has decided to make up for the lost time in the Caspian.

“We have reserves of energy resources and plans for cooperation”, Minister of Industry, Mines and Trade of the Islamic Republic of Iran Mohammad Reza Nematzade told the German newspaper Handelsblatt in April 2014.

But the Caspian is not the major gas province of Iran. About half of its reserves lie on the South Pars field.  It is expected that the launch of 12 new sections of the South Pars field will raise the average gas production in the country from 500 mln up to 1.2 bcm in 2016. The total volume of proven reserves is estimated at 33,6 trillion cubic meters, which makes the country the first in the world in terms of this indicator, Nematzade says.

It was impossible to sell Iranian fuel for a long period because of the sanctions and Tehran had to build gas storages – facilities with the capacity of 1.2 bcm and 4.6 bcm were commissioned.   
But today, when the sanctions are about to get lifted (early in 2016), Iran can make up for the lost time, including in the Caspian, even despite the final unsettlement of the Caspian status.

 

Iran-Russia-Azerbaijan

Relations that the Islamic Republic maintains with its old partner Russian Federation on all current global problems are worth particular attention. It is not ruled out that they will have their interests tightly intertwined in the Caspian in coming months if they manage to coordinate their export ambitions. Probably it was the purpose of the visit of RF President Vladimir Putin to this country on November 23. In November 2015 Russia and Iran signed an agreement about long-term cooperation in geological exploration. The document was signed at the end of the 12th session of the standing Russian-Iranian Commission for trade-economic cooperation. Apart from this, the RF Ministry of Transport and Ministry of Roads and Town-Planning of Iran signed a memorandum of understanding on cooperation in search and rescue at sea and combat pollution of the sea by oil and other harmful substances. From the Russian side the document was signed by Deputy Minister of transport Alexey Tsydenov, from the Iranian side, Deputy Minister of transport and urban development Amir Amini.

Taking into account that Iran intends to stand for its oil market share within OPEC rigid enough, it is assumed that the same thing will happen in the gas market. Noteworthy are tough statements of the Iranian officials. In particular, Nematzade made a statement about the competition with the Russian gas exporter as early as 2014. “We do not want to compete with Russia. Meanwhile, we know that the need of the Europeans in gas is increasing and wish to get our share in the market. Islamic Republic of Iran can become a reliable and long-term partner of Europe. In November 2015 Deputy Minister of Oil of Iran for International and Commercial Affairs Amir Hossein Zamaninia clearly expressed Iran’s position regarding the European direction of export, saying that Iran is ready to sell gas to Europe even if it is not beneficial for the country in terms of the economy.

According to Zamaninia, the Islamic Republic wishes to use its economic potential to establish political relations. Deputy Minister said that many countries in the south of the Persian Gulf, in addition to Qatar, as well as Japan, China and others are interested in purchase of the Iranian gas.

“We want our relations to develop not only with the countries of the Persian Gulf but also with the countries of the west. When the economic relations are strengthened, it helps to reduce political disagreements and minimizes chances for new sanctions to appear”, he said.

In this way, it seems like the relations of the leading global “gas states” are not going to be simple. According to Iran.ru, Iran has a potential to become one of the leading world gas producers. Iran also considers possible transit ways for supply of gas to Europe. But the major paradox that Iran faces today is that the single and real route of delivery of Iranian Caspian gas crosses through Turkey which together with Azerbaijan is building the Southern gas corridor (TANAP-TAP) designed for transportation of over 45 bcm per year (the capacity of the existing Iranian-Turkish gas pipeline makes only 12 bcm per year).

Therefore, the future lines of the Iranian export policy depend on agreements of Tehran with Baku on possible cross-border structures in the Caspian. It is worth a consensus which is planned to be reached within the framework of the Convention for the legal status of the Caspian in Astana in 2016.

 

 

What majors think

As it was expected, international oil-gas companies were extremely cautious with the opportunity to participate in the Iranian tender. But they did not rule out such possibility after full lifting of sanctions.

As the official representative of Shell Jonathan French said while commenting the possibility of participation of the company in the tender for development of Sardar-e-Jangal, the sanctions are still in force in Iran and it is too early speak about Shell’s participation in the tender.

As far as Iran is concerned, we can say that the country has considerable oil-gas resources and Shell has a longstanding experience of working there. We are interested in studying the role that Shell can play in development of the energy potential of Iran if the sanctions are lifted, French said.

Representative of the German RWE Brigitte Lambertz called the prospect of participation in the Iranian tender “market speculation”.

Meanwhile, she noted that Iran, after lifting of sanctions, will become one of the biggest markets in the region. However, according to her, there are certain challenges that arise in the country – transformation of the energy market, growth of use of alternative sources of energy or improvement of the energy efficiency. In this regard, RWE is open for cooperation with companies and state organizations of Iran.

 

  • Regarding the participation in the tender for Sardar-e-Jangal, Director for Business Communication of  ConocoPhillips Kris Sava noted that the Company acts in accordance with the legislation of the United States and is not involved in business discussions with Iran

 

 

                          

Official representative of the French Total Yevgenia Mazalova said that “she has nothing to comment on Sardar-e-Jangal tender. But Total “confirms its interest in Iran where we have a steeped history and are ready to return as soon as sanctions are lifted”, she noted.

 

Only the official representative of the Brazilian Petrobras noted that the company does not disclose its plans but will probably take part in the tender.


BP, for obvious reasons, refused to comment the situation with a tender.

It is not for the first time that oil-gas companies face the similar position of Iran in probable cross-border Caspian structures. Apart from the incident that occurred in 2001, as early as December 14, 1997 the government of Iran announced about the agreement signed with oil companies LASMO and Shell for conduction of geophysical surveys in the Caspian sectors covering a part of not only Azerbaijan’s but also Turkmenistan’s sector.

SOCAR and Ministry of Foreign Affairs of Azerbaijan gave a quick response to that. On the same day President of SOCAR Natig Aliyev sent a written statement to general managers of Baku offices of Shell and Lasmo, which found the signing of this contract illegal as the chosen areas are located to the north from Astara-Hasangulu line – in the Azeri sector of the Caspian Sea. This area is under jurisdiction of Azerbaijan and located in the sovereign territorial zone of the state. Moreover SOCAR has reserved the right to undertake further actions excluding appearance of such precedents in future.

 

 As early as January 14 SOCAR announced a tender for exploration and development of the block of fields Lerik-deniz, D-43, D-41 in the south part of the Azeri sector of the Caspian Sea, which Iran aspired to develop.

In its address to the President of SOCAR, the management team of the Royal Dutch Shell ruled out the conduction of any seismic and other surveys by this British-Dutch company to the north from the Astara-Hasanguly line.

The development of this project has been suspended for now.

In this way, to all appearances an international company, possessing modern deepwater drilling technologies, will not operate at disputable sections as it is fraught with new risks. But it is not known whether the structure, called in Iran Sardar-e-Jangal and located to the north of the Astara-Hasangulu line, is disputable or owned by Azerbaijan. The Ministry of Foreign Affairs of Azerbaijan and SOCAR are staying silent. If they keep staying silent, Azerbaijan will probably lose not only the field but also positions it upholds on the major sectoral issue of division of the Caspian seabed and its resources, which will be addressed at the Astana forum in 2016. Besides, for the first time in the world there will be different principles applied in division of resources of the same sea (in north and south parts of the Caspian) will be carried out on basis of different principles. In such circumstances, what possibility of the five-sided Convention on the Caspian Sea status can be spoken of?

 

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