Iran to revise contracts for rehabilitating low-producing oil wells
New measures are intended to reduce technology companies’ risks, improve access to well data and expand cooperation with operating companies.
Iran’s Oil Industry Innovation and Technology Park is preparing revisions to contracts for rehabilitating low-producing oil wells. The proposed changes would increase financial support, shift part of the risk to the National Iranian Oil Company, remove limits on the number of wells assigned to technology companies and provide online access to well data. Of 17 previous contracts, about five ended through withdrawal or termination and 12 continued. Existing contracts with a reasonable chance of success may be revised or extended.
TEHRAN — Iran’s Oil Industry Innovation and Technology Park is working on revisions to contracts for rehabilitating low-producing oil wells, with the changes aimed at increasing financial support, reducing risks for knowledge-based companies and improving access to well information, the park’s head said.
Mehdi Ahmadkhan-Beigi said the challenges encountered during implementation of previous contracts had been reviewed and that the findings were incorporated into a draft of a new resolution.
Of 17 contracts signed with technology companies, about five companies withdrew from the projects or had their contracts terminated, while 12 contracts continued, he said. The companies’ problems were reviewed during implementation of the contracts.
According to Ahmadkhan-Beigi, the financial structure of the previous contracts was among the main obstacles because it was not sufficiently attractive to technology companies, investors or funds. The proposed model therefore includes changes to the financial structure.
Under the previous arrangement, technology companies carried most of the risk. If the first well failed, another well was assigned to the company, but if the second well also failed, the company would not be reimbursed for its costs. Under the proposed model, the National Iranian Oil Company would assume part of the risk. If the first well failed but the second succeeded, the costs incurred for the first well would also be paid to the technology company in accordance with the contract.
The proposed model would also remove the previous limit on the number of wells that could be assigned to technology companies, allowing them to work on more wells based on their capabilities and capacity.
New contracts would follow the revised model. Existing contracts with a reasonable prospect of success could also continue with revisions and additional support, Ahmadkhan-Beigi said. The extension of some expired contracts is being pursued in light of the companies’ technical capabilities and the possibility of success.
He said the park was designing a system to give technology companies online access to the information required for well-rehabilitation projects. Previously, companies faced paperwork and delays when obtaining data from operating companies, and in some cases information was provided on compact discs.
The production supervision department is participating in the process, while coordination with operating companies is under way to speed up the delivery of required information, he said.
The new model is also expected to provide for the participation of oil-well service companies, allowing large companies with technology subsidiaries to join the rehabilitation projects. Some technology companies previously required drilling rigs to carry out their contracts, imposing significant costs. Ahmadkhan-Beigi said greater cooperation from the National Iranian Oil Company and operating companies was needed to address such obstacles.
He said the revised resolution seeks to address problems identified in earlier contracts, including the financial model, risk allocation, access to information, limits on the number of wells and cooperation by operating companies. The measures described remain subject to implementation through the proposed arrangements.