Bid extension for 16 blocks

16 July 2004
National Iranian Oil Company (NIOC) has extended to 1 September from 11 July the bid deadline for 16 new oil blocks issued for tender last year. The blocks are the first to be offered under linked exploration and production buyback contracts (MEED 23:4:04). About 30 companies bought the field data and a reasonable number are expected to offer proposals for three-four of the blocks whose prospectivity is much higher than the others. NIOC has only asked for a minimum commitment in 11 of the blocks. Proposals for the remaining four can be made as study contracts only.

The minimum work contracts will include a commitment to a few hundred kilometres of seismic studies and at least one exploration well. The companies must also submit a financial proposal, including a projected rate of return.

Prospective bidders say the most attractive blocks are those located in the Zagros area. Other blocks on offer include acreage in the Oman Sea and in the southeast. 'Commerciality is quite straightforward - you need to have at least 250 million barrels of reserves and 1 trillion cubic feet of gas,' says one international oil company executive. 'Some of the Zagros acreage is quite prospective but even NIOC has said this is high risk.'

The contracts will for the first time carry an automatic connection between exploration and development. In the past, the exploration company did not automatically win the right to develop its discoveries. Companies buying field data documents include: Statoiland Norsk Hydro, both of Norway, Austria's OMV, Russia's Lukoil, the UK's BP, the Royal Dutch/Shell Group and France's Total.

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