Total, Shell to develop South Azadegan, Yadavaran

Total and Shell will today sign provisional deals with Iran's state-owned NIOC to develop the South Azadegan and Yadavaran oil fields, which Tehran hopes will drive its long-term plans to boost crude production capacity to 4.63mn b/d by 2021 from around 3.95mn b/d today.

Total will follow up a provisional deal to develop phase 11 of the giant South Pars gas field with a similar agreement to develop the 25.6bn bl South Azadegan oil field, which shares a reservoir with Iraq's 1.4m b/d Rumaila oil field.

South Azadegan is one of five fields that make up the West Karun cluster, where crude output rose to beyond 260,000 b/d in November. NIOC says production will cross 300,000 b/d by the end of the current Iranian calendar year in March. Production at South Azadegan is running at around 40,000 b/d, around 20pc down on year-ago levels.

Total in March signed a non-binding agreement with NIOC for South Azadegan, which is now being operated by NIOC and its subsidiaries, after China's state-owned CNPC was dismissed from the project in 2015 over repeated delays.

NIOC will sign a similar provisional development deal with Shell for phase 2 of the giant Yadavaran oil field, where operator Chinese state-owned Sinopec has raised production to 115,000 b/d — around 30,000 b/d above the phase 1 plateau target originally agreed. An original development plan agreed between Sinopec and NIOC envisaged production to ramp up to 180,000 b/d in phase 2, and to 300,000 b/d in phase 3.

Total will sign a separate deal to develop the Kish gas field, which Iran says holds around 1.4mn trillion m³ of reserves and could produce 9bn m³/yr.

Total and Shell are likely to develop these projects as part of consortia comprising at least one Iranian partner, as per the terms of Iran's new upstream investment contract model. The Iran Petroleum Contract (IPC) forms the bedrock of Iran's plans to secure around $130bn of investment to its upstream through 2021.