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Chinese Firm Starts Oil Operation in Iran's Masjed Soleyman

Source: BBC Monitoring Middle East 7/2/2005, Location: Asia

China National Petroleum Corporation started work on the first phase of a project for recovery and extraction of oil from 10 wells in southern Masjed Soleyman oilfield based on a buy-back contract signed with Iran. The project consultant Iraj Reza'i told IRNA here on Wednesday [29 June] that the Chinese party holds 75 per cent or 85 million dollars worth of stakes in the project while Iran's Naftagren company holds 25 percent of shares worth 15 million dollars in the project. The project was initially granted to Canada's Sheer Energy by National Iranian Oil Company.

Reza'i said the project aims to increase the output of the oil wells to 28,000 b/d from their present 5,000 b/d in the first phase. It also seeks production of an additional 10,000 b/d through recovery of another 22 wells and establishment of an oil refinery in Zila'i District in Masjed Soleyman. He said the project is expected to create jobs for 2,000 people once drilling rigs are installed before start of the second phase of the operation. .

The project was initially to be completed and put into operation in June 2006 but it was postponed due to the refusal of the Canadian partner to go ahead with the project. The buy-back deal for the development project was signed on 28 May 2002, by National Iranian Oil Company and Sheer Energy Inc. of Canada to raise the output of the country's first oilfield in Masjed Soleyman discovered nearly 100 years ago.

The agreement to develop the Masjed Soleyman field in southwestern Khuzestan Province was signed by Deputy Oil Minister Mohammad Mirmo'ezzi and the head of the Calgary-based firm Terry Lawrence. The contract, worth 121.225 million dollars and with a life span of seven years, was the first important deal with a foreign company after another contract was inked with Italy's Eni in July of 2004. The Masjed Soleyman field was discovered in 1908 and was the first to be exploited in Iran.

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