Saturday Feb 24, 2018

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ICOFC Investment Opportunities

(Monday, February 12, 2018) 12:58

TEHRAN, (Shana) -- The Iranian Central Oil Fields Company (ICOFC) is one of five major subsidiaries of the National Iranian Oil Company (NIOC). ICOFC has introduced 23 upstream and mid-stream projects, valued at $5.5 billion, for potential Iranian and foreign investors.

 

The ICOFC accounts for nine memorandums of understanding (MOU) of total memorandums signed between the NIOC and Iranian and foreign companies under the Iran Petroleum Contract (IPC) model.

Furthermore, the ICOFC Investment Directorate is holding meetings with Iranian and foreign companies for EPCF (Engineering, Procurement, Construction and Finance) and EPDF (Engineering, Procurement, Development and Finance) projects, which are valued at $4 billion under supervision of the ICOFC investment director Fereidoun Salehi.

Ever since international sanctions were lifted on Iran in the wake of the implementation of Iran's nuclear deal with six world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA), the NIOC has moved to identify Iranian and foreign E&P companies to develop oil and gas field with the focus being on jointly owned fields under IPC agreements and also to preserve the oil and gas fields output under EPCF and EPDF contracts.

Alongside the NIOC's negotiations to attract foreign investment and transfer in technology, its subsidiaries have drawn up their own investment packages and held talks in parallel with domestic and foreign companies.

The ICOFC's share of field development projects equals $5.5 billion, including $4 billion upstream and downstream gas projects to be operated under EPCF and EPDF agreements.

30% Share in Gas Output

The ICOFC is active in 11 provinces in Iran. Of a total 90 oil and gas fields administered by this company, 30 are already operating.

The ICOFC is supplying around 200 mcm/d of gas plus 180,000 b/d of oil. During winter when demand for gas sharply increases, the ICOFC raises its output to 280 mcm/d.

Before the development of South Pars gas field, the ICOFC used to meet 80% of Iran's gas needs. The startup of South Pars has cut this share to 30% for the ICOFC.

"The ICOFC needs to carry out upstream and midstream projects valued at $5.5 billion in a bid to preserve and enhance its annual output," Salehi said. "The NIOC has embarked on talks under the new model of oil contracts with domestic and foreign companies, which have yielded nine MOUs for the ICOFC-run fields."

"The company has prepared upstream and midstream projects for gas fields worth at around $4 billion within EPCF and EPDF frameworks," he said.

Salehi said that negotiations were under way with Iranian and foreign companies as well as with consortiums willing to invest in these projects.

He said that some companies would account for necessary investment while some others would receive loans from European, Japanese and Chinese banks.

"Some of these companies have told us that European banks would give them loans for up to 85% of the project implementation and commodity supply and the balance will be guaranteed by their partners," said Salehi.

No Capital Commitment

The ICOFC has no obligation with regard to capital needed for the projects. Investors and their contractors shall account for the financing of the projects.

The projects introduced in this package have been defined in two phases. Phase 1, which is about the evaluation of fields, poses no risk to investment companies and the client shall hedge risks. But Phase 2, which is somewhat risky, involves gathering of technical and financial data from candidate companies. So far, the ICOFC has signed MOUs with some of these companies.

Companies from Spain, France and China have expressed their willingness for EPCD-style cooperation. For instance, the China State Construction Engineering Corporation (CSCEC) has teamed up with an Iranian company and has submitted its documents to the ICOFC for assessment. China's WLE, Germany's Siemens and Spain's HOMT are also willing to invest in the ICOFC oil projects.

"For the implementation of Kangan gas pressure booster station, which is a mid-stream project, we are currently in talks with 29 consortiums. We have received the financial, banking and technical documents. Upon an NIOC confirmation, a tender bid will be held for this project," he said.

Salehi said three companies had expressed willingness to develop Sefid Zakhour, Halegan, Sefid Baghoon, Aghar (Phase II) and Farashband fields. These projects are valued at $2.5 billion. Salehi said small-sized companies would not be able to develop these projects, adding that competent companies or consortiums could bid for them.

Iran Companies to Lead Projects

Salehi said Iranian companies would be the leader of these projects, adding that a foreign bank or company would be the financer.

Since decline in production in the ICOFC-run fields is inevitable, installation of pressure booster stations would be a must. But that would need big money and the ICOFC has taken this issue into consideration in its packages. Pressure boosters are envisaged for Kangan, Homa and Varavi fields and renovation is envisaged at Nar pressure booster station so that the accumulated output from these fields would be enhanced.

France's Sofregaz, Siemens, HOMT, CSCEC, and some Iranian companies like Persia Oil and Gas Industries Development Company have expressed readiness for these projects.

Salehi said an Iranian-Chinese consortium is also willing to operate such projects, adding that the consortium included 17 Chinese companies that have joined a group of Iranian firms.

He said this consortium planned to operate gas pressure booster projects, as well as upstream projects like evaluation of fields, early production from fields and their development under EPDF and EPCF contracts.

1-3 Years for Projects

These projects would take one to three years to come online. Repayment would be done six months after the startup of projects, which is guaranteed by the NIOC. The period of repayment varies from 3 to 10 years, depending on the volume of the project. Investment fees and interest rates will be also paid.

Once the aforesaid projects have been implemented, the ICOFC will see its accumulated oil production increase 700,000 b/d and its gas output increase 80 mcm/d.  

 

Courtesy of Iran Petroleum