Iraq has sunk its first oil well on the Huwaiza oil field, which straddles Iran as momentum gathers on the development of shared oil and gas assets on both sides of the border.

Huwaiza is estimated to hold a billion barrels of reserves and is part of the large Maysan oil fields, which comprise the Buzurgan, Abu Ghirab and Fuqua, which stretches across the border.

The oil field complex is being developed by a consortium led by China National Offshore Oil Corporation, Turkish Petroleum Overseas Company and Iraqi Drilling Company.

Production from the field has been earmarked for 450,000 barrels a day (b/d) by 2017, from current levels of 95,000 b/d.

The developer has tendered the project management consultancy contract on the project, with the submission date set for 17 July.

Neighbouring Iran, which seized an oil well from the development in 2009 has begun prioritising the development of oil fields that straddle its border with Iraq.

The National Iranian Oil Company is looking to tender the North and South Azadegan development this year under the new Iranian Petroleum Contract and had pre-qualified 29 companies in January.

Robin Mills, chief executive at Dubai-based Qamar Energy says that apart from the clearly defined Shatt al-Arab demarcation, other borders are more loosely defined.

“There is heavy oil in these reservoirs, which doesn’t move around unlike gas,” he says.

Co-operation between the two sides on joint field development could be a possibility as political ties remain warm.

In February, Iranian and Iraqi oil ministries signed a memorandum of understanding to settle disputes over shared fields. In 2010, the Iraqi government invited Iran to invest in cross-border fields, which Tehran declined because of lack of funds.

As development progresses on these shared fields, contractors interested in these lucrative projects will remain wary of the possibility of disputes.

“Contractors will have to factor in the risk of doing business along the border with two states. They’ll account for grey areas that are disputed where they won’t operate,” says Mills.