Caspian Sea, the world’s largest inland body of water, was mainly a center of fishing activities and also a marine transportation hub by the middle of the past century. But discovery of the first oil and gas reserves in the world’s largest lake in the late 1940s added to its strategic and geopolitical significance.

Such discoveries encouraged Iran, a major producer of oil and gas in the world, to put the spotlight on conducting exploration activities in the southern Caspian region along the northern borders of the country.

While extraction of oil and gas from the Caspian deposits requires high technology and huge investment as it needs deepwater drilling, it seems to create an opportunity for Iran to achieve such know-how.

In 2002, Iran discovered a gas field in 700 meters water depth off the shore of the northern province of Gilan in the Caspian Sea and named it Sardar-e Jangal. The field contains total proven reserve of around 50 trillion cubic feet of natural gas.

Some 10 years later, exploration operation of Amir Kabir semi-submersible drilling rig (the largest offshore structure of the country with a weight of 14,700 tons) in the field led to discovery of an oil layer in 728 meters water depth in Sardar-e Jangal. The field is estimated to hold two billion barrels of quality crude that is toxic hydrogen sulfide free. Some 25% of the deposit is thought to be recoverable.

Iran completed the drilling of the first exploration well of the field in 2012. In November 2014 the production tests were carried out successfully in the second well which was 3,500 meters deep. The tests, including pressure and temperature data, oil and gas recovery rate and other production parameters, were performed to make sure about recovery from the field.

With some deposits discovered and some exploration activities conducted, the country is now seeking technical assistance from the outside to expand its deepwater operations in the Caspian Sea.

‘IPC to put Sardar-e Jangal on tender’

Oil Minister Bijan Namdar Zanganeh said last June that oil recovery from the Caspian Sea is on the agenda but it needs special equipment and experience to extract oil from deep waters. 

Production of oil in the Caspian Sea is not a priority for Iran but Sardar-e Jangal field has been introduced to investors within the framework of IPC (Iran’s new model of oil contracts, known as integrated petroleum contract).

Mahmoud Khaqani, an international energy expert, told the Tehran Times in a telephone interview on Tuesday: “The Caspian Sea is among the regions where the cost of oil and gas production is very high. Major multinational companies are enjoying and also developing the technology for reducing production costs in such areas. It is what Iran lacks; therefore, the oil minister’s approach that production in the Caspian Sea, which requires such high cost, is not a necessity for the country at the moment seems right.”

But at the same time, the Caspian Sea is an opportunity for the Iranian technology, the analyst also underscored.

‘New chapter in oil industry’

The former OPEC governor Mohammad-Ali Khatibi, who has also served as the National Iranian Oil Company’s director for international affairs, believes that the development of Sardar-e Jangal could be very important for the country.

“Development of this field could open a new chapter in our oil activities in the Caspian Sea, because we have not had any serious and important activity over there so far, as our main job has been mainly exploration, and if we go on developing this field it could be a start for our serious work in that region,” he told the Tehran Times in a telephone interview on Monday.

“Anyway, we have been waiting many years for something important to occur there,” he added.

Last May, Farhang Khatibi, who at the time was the acting managing director of Khazar Exploration and Production Company, which is in charge of exploration, development and production operations in the Caspian region, said that the groundwork has been laid for the development of Sardar-e Jangal oilfield based on IPC.

He said the post-sanctions era paved the way for boosting relations with foreign companies and several foreign corporations have declared interest to invest in the Sardar-e Jangal project.