Iran and Total to Expand World's Largest Gas Field

South Pars

By MarEx 2016-11-08 17:50:35

Total has signed an agreement with the National Iranian Oil Company (NIOC) for the development of phase 11 of South Pars, the world's largest gas field. 

The South Pars / North Dome gas field covers an area of 9,700 square kilometers (3,700 square miles), of which 3,700 square kilometers (1,400 square miles) (South Pars) is in Iranian territorial waters and 6,000 square kilometers (2,300 square miles) (North Dome) is in Qatari territorial waters.

According to the International Energy Agency, the South Pars / North Dome field holds an estimated 1,800 trillion cubic feet (51 trillion cubic meters) of in-situ natural gas and some 50 billion barrels (7.9 billion cubic meters) of natural gas condensates.

The South Pars 11 project (SP11) will have a production capacity of 1.8 billion cubic feet per day, or 370 000 barrels of oil equivalent per day. The produced gas will be fed into Iran's gas network.

Total will operate the SP11 project with a 50.1 percent interest alongside Petropars (19.9 percent), a 100 percent subsidiary of NIOC, and the Chinese state-owned oil and gas company CNPC (30 percent).

"The first gas is to come online 40 months after the contract is signed," said Mohammad Meshkinfam, managing director of Pars Oil and Gas Company, which is in charge of all projects at South Pars. "Phase 11 will produce 2 Bcf on a daily basis. Each phase of South Pars will yield $5 billion annually."

“Following Total’s successful development of phases 2 and 3 of South Pars in the 2000s, the Group is back to Iran to develop and produce another phase of this giant gas field,” said Patrick Pouyanné, Chairman and CEO of Total. “Total will develop the project in strict compliance with national and international laws and looks forward to working alongside the Chinese state-owned company CNPC in this additional international partnership. This project fits with the Group’s strategy of expanding its presence in the Middle East, where the origins of the Group lie, and growing its gas portfolio by adding low unit cost, long plateau gas assets.”

Under the terms of the agreement, NIOC and the project partners will conduct exclusive negotiations to finalize a 20-year contract in accordance with the technical and economic terms established in the agreement, within the framework of Iranian Petroleum Contract (IPC) recently approved by the Iranian Parliament.

In parallel, Total will launch engineering studies and a call for tender process so that construction contracts can be awarded immediately upon signature of the final agreement.

The SP11 project will be developed in two phases. The first phase, with an estimated total cost of around $2 billion, will consist of 30 wells and two well head platforms connected to existing onshore treatment facilities by two subsea pipelines. 

At a later stage, a second investment phase, involving the construction of offshore compression facilities, will be launched once required by the reservoir conditions.

International oil companies abandoned Iran after sanctions were imposed to curbing Iran's nuclear program. Ahead of the signing of the agreement, Iranian oil minister Bijan Zanganeh said, "I hope that the doubt of some companies that are hesitating and doubtful about working in Iran and its oil sector will be removed by this move today and speed up their decision-making process regarding Iran's market."