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Iran Press: Technical Problems Halt Production at Two Oil Fields

Posted on: Sunday, 16 October 2005, 09:00 CDT

Text of report by the Economic Service under the headline: "Multi- million-dollar losses caused by premature opening of two oil fields", published by the Iranian newspaper Keyhan website on 13 October

Economic Service: Since about a week ago, activities at the oil production wells of the Sorush and Nowruz oil fields have been halted, and as a result, on the basis of estimates by the experts, the country has lost more than 70 million dollars in foreign currency earnings.

According to reports received, since Tuesday last week up to now, the Sorush and Nowruz oil fields have not produced even one barrel of oil, because of what the relevant officials have described as technical problems. This is in spite of the fact that these two oil fields normally produce around 190,000 barrels of oil per day, and they both began operation only two months ago.

All indications suggest that the former Oil Minister Bizhan Zangeneh commissioned and inaugurated different oil projects one after the other, in order to demonstrate a positive performance record for his ministry. He did this even though this kind of project exploitation is no longer viable and rational.

According to experts, if the exploitation of these two projects had taken place on the basis of a careful plan, they would not have encountered their present problems and their production would not have come to a complete halt.

An oil expert has commented on this subject and said: Before implementing every project, the major oil contractors in the world as a rule study and assess all the relevant issues and possibilities, and only once these studies are complete, they enter the actual implementation phase. The question therefore is how come an international and famous company such as Shell tackles the different stages of a major project in this way, and two months after the starting date, the production at the oil wells comes to a halt?

This expert went on to say: It seems that during Zangeneh's term in office, there was a lot of pressure on the Shell and its associate contractors to declare projects ready and operational, especially since these companies held no further responsibilities and were no longer accountable once a project was declared complete. Although the Shell Company completed this project with a delay of around one year, if it really wanted to finish and deliver the project ready and free from problems, it still had to delay the completion date by a further period of time. However, it seems that the aim was to ensure that these projects would be included in the list of successes and achievements of the former Oil Minister.

The oil expert added: The Shell Company, for its part, did not implement the project properly. For instance, it delegated the task of construction of the main platforms at the said two oil fields to a UAE company, which in turn did not give a lot of attention to the quality of the work, and it has even been suggested that the material used to build the components of the platforms were of low and unacceptable quality, and in some cases, the Continental Shelf Company has already voiced its objections and protests against these practices.

Operation of Sorush oil field resumes

In the wake of the halt in production at the Sorush and Nowruz oil fields, Abbas Vakili, the chief of operations at the Continental Shelf Company, in an interview with our reporter, commented on the problems which have been encountered, and said: The technical problems in the Sorush oil field will be resolved tonight and it will resume its operation immediately afterwards.

He added: The problem which occurred in the Sorush oil field and disrupted its production was to do with one of its heat transformer units, which had certain glitches right from the outset.

He went on to say: Since the oil which comes to the Sorush platform must pass through the sea first, it must be heated up in order to facilitate further processing. For this reason, the exhaust systems of the electricity turbines adjacent to the platforms were used to provide the required heat. He said that this system was shared by both the Sorush and Nowruz projects.

He added that the one of the heat transformer units was faulty right from the start. He stated: In order to remedy these faults, around 3,000 under water inter-connected tubes, each measuring around 5 to 6 metre, must either be repaired or replaced. Of course, the Shell Company has already started the necessary work on these tubes some time ago.

Vakili emphasised: At the present, the Shell Company has provisionally delivered the Sorush and Nowruz projects to us, and the definite completion and delivery date may take several more months.

He said: In the last few days, we had adverse weather conditions at sea, and ships could not anchor at the platforms to be loaded. On the other hand, the oil storage tanks were full as well, and we had no option but to close down the oil well, or at least reduce its output. We eventually decided to close the [oil] pipeline [feeding the storage tanks]. When production got under way again, the pipes for warm water movement were perforated, and this caused the pollution of water. Because the location of this problem was close to the electricity turbines and there was a danger of explosion at any time, by closing down the oil pipeline, we managed to drain the polluted water, and replace it with clean water. In view of the completion of these tasks, the Sorush project will start operation again tonight.

At the same time, Vakili emphasised: According to the provisions of the contract, the Shell Company is responsible and accountable for any technical problems in the Sorush and Nowruz oil fields. The Shell has accepted this and is working towards resolving the problems.

He went on to say: At the present, we are in the guarantee periods after the completion of the projects, and from a legal point of view, the Shell Company is fulfilling its obligations by working on the problems.

Commenting on the reports in a morning newspaper which suggested that the completion and operation of the Sorush and Nowruz projects had taken place hastily and in a superficial manner, Vakili said: The inauguration of project was not hasty in any way, and it went ahead according to the timetable.

Source: BBC Monitoring Middle East

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