OREANDA-NEWS. December 08, 2016. Iran's state-owned NIOC today signed three preliminary agreements with Shell with a view to future development.

Shell will evaluate the 25.6bn bl South Azadegan oil field, which shares a reservoir with Iraq's Rumaila oil field; the Yadavaran oil field, also on Iran's border with Iraq; and the offshore Kish gas field in the Mideast Gulf.

Shell will "deliver a pre-master development plan proposal" for all three projects, NIOC's engineering and development director Gholamreza Manouchehri said. NIOC typically gives companies six months to deliver such proposals.

Total signed a similar agreement to study the South Azadegan field in March, but earlier suggestions from the ministry that Total would be finalizing agreements with NIOC today were retracted. Total declined to comment.

"We have signed such agreements with other companies before today, and may do so again [in the future]," Manouchehri said. "The intention is to look at all of these proposals in order to determine whether or not to accept a proposal, or take the project to tender."

NIOC has previously said Iran is planning to hold its first international bidding round since sanctions relief in the first quarter of 2017. The deadline for companies to submit their prequalification documents for this and subsequent bidding rounds was on 4 December.

South Azadegan and Yadavaran are two of the five fields that make up the West Karun cluster — a group of fields Iran expects will drive the country's plans to boost crude production capacity to 4.63mn b/d by 2021 from around 3.9mn b/d today. NIOC said crude production at the five-field cluster rose to beyond 260,000 b/d in November, and should cross the 300,000 b/d mark by the end of the current Iranian calendar year in March.

Production at South Azadegan is now running at around 40,000 b/d, around 20pc down on year-ago levels. The field is now being operated by NIOC and its subsidiaries, after China's state-owned CNPC was dismissed from the project in 2014 over repeated delays.

At Yadavaran, Chinese state-owned operator Sinopec is producing 115,000 b/d — around 30,000 b/d above the original phase 1 plateau target. An initial development plan agreed between Sinopec and NIOC envisaged output to ramp up to 180,000 b/d in phase 2, and to 300,000 b/d in phase 3.

Under Chinese operatorship the recovery factor at these fields stands at around 5.5-6pc — a rate Manouchehri deemed unacceptable given the importance these fields hold to Iran's mid- to long-term plans. "Every 1pc increase in recovery at these reservoirs will represent an additional 700mn bl of production, which at current prices is worth \\$35bn," he said.

The offshore Kish gas field, in the Mideast Gulf, holds around 1.4mn trillion m? of reserves, according to NIOC, and could produce 9bn 25mn m?/d.

"Today is just the start of a renewed co-operation with NIOC. There remains some way to go, but it is my genuine hope that we will see a growing co-operation between the two companies, resulting in a long-term partnership," Shell vice president Hans Nijkamp said in Tehran today.