ABERDEEN, Scotland (Press & Journal) – A Middle Eastern oil firm will take more steps towards developing its second North Sea field later this year.

First gas began to flow from the Rhum field last December, and work is continuing at the Hood oil discovery.

Iranian Oil Company UK has a couple of development options for Hood: either as a subsea tieback to the nearby Piper field or by using a floating production vessel.

IOC UK owns 100% of Hood and a farm-out could be on the cards before the £100 million development begins to produce. The firm's Aberdeen-based managing director, Mohammad Ghodsi, said yesterday that they were negotiating with a Canadian company and a decision would be made in May.

Hood, which was discovered in 1975, has recoverable reserves put at 21 million barrels of oil.

However, the field is much smaller than Rhum, which was the UK's largest undeveloped gas discovery. It was developed by operator BP and IOC UK at a cost of around £350 million.

Rhum is a subsea tieback to BP's Bruce field nearly 30 miles away and is expected to yield recoverable reserves of 800 billion cubic feet of gas (about 140 million barrels of oil equivalent).

Mr Ghodsi said a decision would be made later this year on whether IOC UK expands its North Sea portfolio beyond its two current blocks.

IOC UK was formed in 1971. It says its presence in the North Sea was initiated because of the strong relationship which had developed between the National Iranian Oil Company and BP in the course of business in Iran.

BP and IOC UK both have a 50% stake in Rhum.