A consortium led by France’s Total on Tuesday, 8th November signed a $4.8 billion provisional agreement to develop part of the giant South Pars gasfield, with Iran. The agreement was signed in Tehran with the National Iranian Oil Company, the state-controlled energy company. This is the first Western energy investment agreement with Iran since international sanctions were lifted this year (Iran nuclear accord). With this agreement, Iran is looking forward to attract more overseas investments. The Iranian government says, the deal is an icebreaker and it looks forward to start business with Russian and European oil and gas companies.
As per the United States Energy Information Administration, Iran has world’s second-largest gas reserves and fourth-largest oil reserves. But to revive or effectively extract these reserves it would require approximately $200 billion of investment over the next five years.
The South Pars / North Dome field is a natural gas condensate field in the Persian Gulf. It is the world’s largest gas field, shared between Iran and Qatar. As per the International Energy Agency (IEA) estimate, it holds 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. Total SA France, along with China’s CNPC and Iran’s Petro Pars will be developing the phase 11 of South Pars. The final contract expected to be signed in the beginning of 2017 and will last for next 20 years. The French Total Co, CNPC of China, and Iran’s Petro Pars will respectively be responsible for performing 50%, 30% and 20% of the development agreement of phase 11.
The project of phase 11 is to be designed and implemented to supply the required sour gas to “Iran LNG” unit and produce associated gas condensates. The broad technical specifications of the project as agreed upon in the agreement are as follows –
- Gas production amounting to 2000 MMscf/d from South Pars Gas Field
- Extraction of 1900 MMscf/d sour gas to feed LNG Plant
- Production of 80,000 bbl/d of heavy gas condensates
The consortium will be wholly responsible for developing the offshore and onshore facilities required to meet the targeted / agreed production levels of the gas. The onshore facilities of the project are to be constructed some 136 kilometers away from the offshore facilities, in Pars Special Economic Energy Zone 2 (PSEEZ-2).
International political experts are questioning whether this would be Iran’s first and last energy deal Post Sanctions? And this is due to the thumping win of Mr. Donald Trump, the U.S. President Elect. As he had lambasted the Iran accord on the campaign trail and hinted he’d like to re-impose sanctions.