Iran will begin drilling its first Caspian Sea oil exploration well in 2012, after spending almost $500m on the construction of a semi-floating drilling platform and supply boats this year.

The well is partially drilled and state-owned National Iranian Oil Company (NIOC) aims to complete it by the end of the first quarter of 2012, says Mahmoud Mohaddes, NIOC director for exploration, Iran Daily reports.

State-run Khazar Oil Exploration & Production Company, a subsidiary of NIOC, is carrying out the work. Brazilian oil giant Petrobras signed a production sharing agreement for the Caspian development, the first in Iran, but decided to reassess its Caspian Sea investment plan in October 2008 to take account of the effects of the economic crisis (MEED 22:2:09).

Mohaddes would not name the foreign contractor involved in the construction of the semi-floating drilling rig.

Iran currently has no production from the sea, which it shares with Azerbaijan, Kazakhstan, Russia and Turkmenistan. Kazakhstan plans to begin production next year at the Kashagan oilfield in the northern Caspian, partnering with Italy’s Eni, the US’ ExxonMobil, UK-Dutch Shell Group and France’s Total.

There are 21 billion barrels of oil in the south Caspian Sea region, according to a 2001 study by Khazar and oil consortium Caspian International Petroleum Company (Cipco), which identified nearly 50 potential oil and gas structures.

The neighbours have disagreed over how to share the sea and its resources ever since the collapse of the Soviet Union in 1991.  Iran wants the sea split into five equal parts, while the other four countries seek sectors matching the length of their respective shorelines. Under their terms Iran’s share would be reduced from 20 per cent to less than 15 per cent.