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Cablegate: Iran Offshore Oil Production Declining, Failing to Meet

VZCZCXRO3096
PP RUEHBC RUEHDE RUEHKUK RUEHTRO
DE RUEHDIR #0415/01 2791359
ZNR UUUUU ZZH
P R 061359Z OCT 09
FM RPO DUBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 0558
INFO RUEAIIA/CIA WASHDC
RHMFIUU/DIA FT BELVOIR
RUCNIRA/IRAN COLLECTIVE
RHEHAAA/NSC WASHINGTON DC
RUMICEA/USCENTCOM INTEL CEN MACDILL AFB FL
RUEIDN/DNI WASHINGTON DC
RUEHDIR/RPO DUBAI 0559

UNCLAS SECTION 01 OF 03 RPO DUBAI 000415

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: IR PGOV PREL
SUBJECT: IRAN OFFSHORE OIL PRODUCTION DECLINING, FAILING TO MEET
PRODUCTION TARGETS

DUBAI 00000415 001.2 OF 003


1. (U) SUMMARY: Recent statistics in Iranian press indicate
Iran's current offshore oil production in the Persian Gulf is
declining. This decline comes despite ambitious growth plans
for offshore production in the current Five-Year Development
Plan, which has the target of one million barrels per day
offshore oil production by March 2010. Recent past peaks for
offshore Persian Gulf oil production have been over 850 thousand
barrels per day, but this production for the first half of the
current Iranian year has been 657 thousand barrels per day.
Iran's Persian Gulf oil production woes illustrate the truth
that unless Iran can attract significant energy sector foreign
direct investment, it will be hard pressed to maintain, much
less significantly increase, onshore or offshore production.
END SUMMARY.

2. (U) Iran's offshore Persian Gulf oil production is managed by
the Iranian Offshore Oil Company (IOOC), itself a subsidiary of
the National Iranian Oil Company (NIOC). IOOC has four
operational districts (Bahregan, Kharg, Lavan, Sirri), and is
charged with producing oil and gas from the Persian Gulf,
excluding North and South Pars gas fields.

3. (U) According to trade publications, recent past peak oil
production of these offshore Persian Gulf fields has been
approximately 862 thousand barrels per day (mbpd), with a
general range of overall production from 655 mbpd to 801 mbpd.

4. (U) Western trade press estimates that if optimally developed
future potential of these IOOC fields could be almost 1.5 mmbpd.
In order to meet targets set in Iran's Fourth Five-Year
Development Plan (FYDP), the IOOC must increase its daily crude
oil production from these existing Persian Gulf fields by the
end of the current year (1388, which ends 20 March 2010) to 1
million barrels per day (mmbpd). However with less than six
months left in the Fourth FYDP, not only has this IOOC
production not increased to 1 million barrels per day but in the
first half of the year (March 21 to September 20 2009) has
decreased by 63 thousand bpd (mbpd) to approximately 657 mbpd.

5. (U) According to an October 2009 Iranian trade press article,
details of IOOC's declining oil production for IOOC's four
operational areas are as follows:

BAHREGAN OPERATIONAL AREA

6. (U) IOOC's Bahregan Operational Area consists of the
following fields: Hendijan, Bahregansar, Noruz, Sorush. In
Shahrivar month of this year (22 August to 22 September 2009)
the average production fell to 168 mbpd, a drop of 27 mbpd in
comparison with the same period last year.

Production breakdown by field is as follows, followed by average
production in the first six months of the previous Iranian year:

Average Daily Oil Production in Shahrivar (22 August to 22
September 2009) / Average for First Six Months of Last Iranian
Year (21 March to 21 September 2008):

Hendijan: 23 mbpd / 28 mbpd

Bahregansar : 7 mbpd / 9 mbpd

Nowruz: 54 mbpd/ 66 mbpd

Sorush: 82 thousand bpd / 90 thousand bpd


DUBAI 00000415 002.2 OF 003


KHARG OPERATIONAL AREA

7. (U) IOOC's Kharg Operational Area consists of the following
fields: Abuzar, Dorud, Foruzan (joint with Saudi Arabia). In
Shahrivar month of this year (22 August to 22 September 2009)
the average production fell to 316 mbpd, a decrease of 20 mbpd
in comparison to a same period last year.

Production breakdown by field is as follows, followed by average
production in the first six months of the previous year:

Average Daily Oil Production in Shahrivar (22 August to 22
September 2009) / Average for First Six Months of Last Iranian
Year (21 March to 21 September 2008):

Abuzar: 142 mbpd / 151 mbpd

Dorud: 127 mbpd / 139 mbpd

Foruzan: 45 mbpd / 45 mbpd

LAVAN OPERATIONAL AREA

8. (U) IOOC's Lavan Operational Area consists of the following
fields: Rashadat, Resalat, Salman (joint with UAE), Balal. In
Shahrivar month of this year (22 August to 22 September 2009)
average production relative to last year's same period stayed
the same, with no noticeable decrease. Average crude oil
production of the Lavan area in the first six months of this
year was approximately 90 mbpd.

Production breakdown by field is as follows, followed by average
production in the first six months of the previous year:

Average Daily Production in Shahrivar this Year / Average for
First Six Months of Last Iranian Year (21 March to 21 September
2008):

Rashadat: 9 mbpd / 3 mbpd

Resalat: 10 mbpd / 9 thousand mbpd

Salman: 51 mbpd / 57 mbpd

Balal: 19 mbpd / 18 mbpd

SIRRI OPERATIONAL AREA

9. (U) IOOC's Sirri Operational Area has the following fields:
Sivand, Dena, Nosrat, Alvand, Esfand. In Shahrivar month of
this year (22 August to 22 September 2009) the average
production fell to 82 mbpd, a decrease of 15 mbpd in comparison
to a same period last year.

Production breakdown by field is as follows, followed by average
production in the first six months of the previous year:

Average Daily Production in Shahrivar this Year / Average for
First Six Months of Last year (21 March to 21 September 2008):


DUBAI 00000415 003.2 OF 003


Sivand: 7 mbpd / 13 mbpd

Dena: 13 mbpd / 17 mbpd

Nosrat: 2 mbpd / 5 mbpd

Alvand: 3 mbpd / 6 mbpd

Esfand: 56 mbpd / 53 mbpd

10. (U) An October 6 Iranian trade press story notes that that
these noticeable offshore oil production declines occurred
whilst IOOC's numerous projects to expand production, to include
NGL Kharg, the Bahregansar Expansion Project, and a plan for
early production from the joint (with Oman) Hengam gas field,
are all experiencing delays.

11. (U) COMMENT: According to trade press, Iran's annual natural
decline rate for crude oil production is anywhere from eight to
11 percent. Iran's Persian Gulf oil production woes illustrate
the truth that unless Iran can attract significant energy sector
foreign direct investment, it will be hard pressed to maintain,
much less significantly increase, onshore or offshore
production. END COMMENT.
EYREAE

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