Ali Osooli, CEO of Khazar Exploration and Production Company (KEPCO), says the company is still in talks with leading European firms for cooperation in the Caspian Sea despite US threats to penalize them.
He, however, says KEPCO is also able to push ahead with its development activities in the Caspian Sea even without cooperating with foreign companies, as was the case with the "Sardar-e-Jangal" oil find in 2012, when Iran was under tough oil sanctions.
The impact of US sanctions on Iran’s oil industry is not ignorable, but the experience of working four years under sanctions has shown that Iran has never stopped its activities.
The following is the text of "Iran Petroleum" interview with Osooli about KEPCO’s activities:
Have KEPCO activities in the Caspian Sea been disturbed due to the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA)?
KEPCO activities are not tied to political and international agreements. Both before and after the JCPOA and even after the US withdrawal from JCPOA, KEPCO has been working in line with objectives set by National Iranian Oil Company (NIOC).
The art of management is to make maximum use of political, security and international tools and diplomatic opportunities created by politicians. After implementation of the JCPOA, we tried our best to benefit from cooperation with international companies for the materialization of our objectives, i.e. application of cutting edge technology and increasing productivity in the Caspian Sea. However, it does not mean that our activities are bound to political and international agreements. As you know in 2012 amid tough international sanctions and restrictions, Iran made oil exploration in the Caspian Sea for the first time without the presence of foreign companies and by only relying on its own domestic potentialities and human resources and logistics. That happened once more in 2014 before the JCPOA was signed. We drilled a second exploration well up to the depth of 3,500 meters, which proved the previous oil discovery and ended in the exploration of the "Sardar-e-Jangal" reservoir. One of the layers of this oil field is estimated to contain 2 billion barrels of oil in place. In case conditions for development and production become ready, we would be able to recover 500 million barrels of oil. Given the Caspian Sea features, including being deep and landlocked, and no precedent of Iran’s involvement in deepwater exploration and development, it is necessary to have high-tech international companies in Iran due to the high risk of activities. We are set to benefit from such opportunity. However, we do not confine ourselves to the presence of foreign companies and in parallel with negotiations with foreign firms we are working with domestic companies for development activities in the Caspian Sea.
Do you mean that activities in the Caspian Sea now depend on the negotiations with domestic and foreign firms?
No, not at all! We are currently conducting many activities in the Caspian Sea. First and foremost, we are renovating KEPCO’s maritime fleet. This fleet is the main and unrenewable asset of NIOC, which has to be protected in the best possible manner to be used in necessary cases. Second, we continue our negotiations with the companies which are experienced in deep waters activities. We are not disappointed with the talks and we hope that we would be able to team up with some companies in the future. Third, we are following up on Iran’s membership of deep-waters technology club. To that end, we have set out our objectives by publishing reliable documents and training our human resources. We have had cooperation in oceanology and meteorology with the Research Institute of Meteorology and some universities like the Qazvin International University, Amir-Kabir University of Technology, Sharif University of Technology and particularly Tabriz University with a view to meeting our scientific needs in deep-water exploration, development and production activities. Fourth, given the agreement reached between the five heads of state of Caspian Sea littoral states and a memorandum of understanding signed between the Iranian and Azeri presidents, we are currently following up on oil and gas cooperation agreements with Azerbaijan. Given the Caspian Sea’s unique conditions and no background of cooperation at this lake, the type of agreement and its related technical and financial transactions has its own complexities. But we hope to achieve acceptable results by holding meetings regularly. Of course Iran enjoys advantages in these negotiations.
Which sector are these advantages in?
Experts at Azerbaijan’s SOCAR have confirmed the reliability of Iranian manpower for operations in the Caspian Sea. SOCAR, in partnership with Britain’s BP, has carried out extensive activities in the Caspian Sea over the past two decades. BP has invested nearly $70 billion in this sector. SOCAR experts initially imagined that Iranian experts would not be experienced enough in deep-water operations due to international sanctions, but after several meetings they acknowledged the reliability of Iranian manpower as an advantage of Iran. The second advantage is Iran’s platform and vessels in the Caspian Sea as a valuable asset. Azerbaijan, Kazakhstan, Turkmenistan and even Russia have time and again asked for renting the platform, but due to the priority of operation in Iran we have no plan to rent it out to neighboring countries. Our third advantage is the possibility of overhaul of platforms. The Caspian Sea is a landlocked lake and any company willing to build a platform at this lake has to construct a shipbuilding yard like Iran’s SADRA. Building such a plant would cost billions of dollars. That is while in Iran we have already such a plant.
In the event of success of talks with foreign companies, shall they do platform overhaul too?
Yes, one of our main items in talks with foreign companies is to carry out overhaul of platforms and vessels. If we planned to follow up on the reparation of talks alone we would have concluded a contract for development activities. Some renowned companies had visited us and presented their job description, but NIOC policy has been doing overhaul alongside developing oil fields of the Caspian Sea.
You mentioned that you are also in talks with Iranian companies. Since Iran is not experienced in deep-water activities, do you think Iranian firms would be able to handle such job?
Compared with five years earlier, the conditions have improved for Iranian companies. Today we have companies which either directly or in partnership with foreign companies can conduct necessary activities in the Caspian Sea. Furthermore, there are Iranian companies involved in exploration. The number of Iranian companies is however limited in this sector and we have to assume the risk of costs and time due to the low experience of Iranian companies in this sector. In our talks with foreign companies we insisted on the point that they have to closely work with Iranian companies. We have introduced some Iranian companies to foreigners while some others have been introduced to us by foreigners.
To what extent is the involvement of foreign companies necessary in the Caspian Sea?
In any case, it would be impossible to disregard the experience of leading international companies with experience in deep waters. Cooperation with such companies will reduce the required costs and time while boosting productivity. There is currently ground for cooperation with foreigners in the Caspian Sea thanks to the facilities made available by NIOC. We are also ready to negotiate with leading international companies in deep waters in favor of national interests. Of course, there are talks under way with top international firms.