Iran Discovers New Oil Field

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Seismological surveys of parts of the Central Kavir desert in Iran have revealed a new oil deposit, local media reported, citing an unnamed source. The source did not reveal any details about the find, including estimated reserves, but instead spoke about agreements struck with Petrovietnam and Italy’s Edison, which would see the two foreign companies resume their exploration at two other oil blocks, Danan and Dayyer. The Danan oil field, with reserves estimated at 3.738 billion barrels and daily output at 8,000 barrels, was tendered along with eight other oil fields by the Iranian Central Oil Fields Company. The Dayyer offshore oil field was auctioned back in 2007, and Edison struck a deal with the National Iranian Oil Company to explore the deposit in the following year. The US$107-million contract, however, was suspended by NIOC in 2012, with the state company accusing Edison of repeated delay sand failure to stick to its contractual obligations.

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Iran is currently producing 3.8 million barrels of crude daily and its output will remain at this level in spite of OPEC’s agreement to extend a production cut until March 2018. In the initial OPEC deal, Iran was allowed to slightly raise output and keep it capped at 3.797 million bpd. Four months into the deal in which all others – except for exempt Libya and Nigeria – had to cut, the Islamic Republic has been sticking to that production ceiling, OPEC secondary-sources data show.

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Now, Iran wants to raise its output to 5 million bpd over the next four years, to which end it will need major assistance from foreign oil companies. Tehran is optimistic, however, despite lingering U.S. sanctions that are making a lot of energy industry players wary of entering Iran. At the end of last week, a senior government official said that oil contacts worth around US$50 billion would pass into their operational phase in 2018.

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