National Iranian Oil Co. (NIOC) will begin supplying its domestic market in 2021 with the country’s first-ever international petroleum contract (IPC) with Total SA and state-owned China National Petroleum Co. (CNPC) for Phase 11 of the giant South Pars gas field (SP11).
The first phase of the new contract consists of 30 wells and two wellhead platforms for an estimated cost of $2 billion. The project will produce 2 bcfd (400,000 boe/d) through existing onshore treatment facilities by two newly constructed subsea pipelines. Pending reservoir conditions, a second phase will call for the installation offshore compression facilities on the South Pars field. The 20,000-tonne compressor platforms will be the largest ever installed in the Gulf, according to Wood Mackenzie Ltd.
This agreement marks Iran’s first upstream contract with a foreign firm in 10 years. WoodMac senior research analyst Homayoun Falakshahi said, “The South Pars Phase 11 deal will, Iran hopes, prompt other IOCs to reenter the country’s upstream sector,” adding that this development could become one of President Hassan Rouhani's main economic achievements.
The 20-year contract is based on the terms of the head of agreement signed in 2016, and it can be extended by another 5 years (OGJ Online, Nov. 8, 2016). Total project investment is estimated at $5 billion.
South Pars has an estimated 21 tcf of gas in place, and WoodMac estimates SP11 could recover more than 10 tcf of sweetened gas with 450 million bbl of condensate.
The SP11 consortium includes operator Total 50.1%, CNPC 30%, and wholly owned subsidiary of NIOC, Petropars 19.9%.
Iran’s domestic gas market is the third largest globally with 200 billion cu m (bcm) consumed annually, which does not include nearly 50 bcm/year reinjected into oil field. Increased gas production could lead to new LNG export opportunities, WoodMac said. The analyst firm said Iran started text exports to Iraq in mid-June, and could export as much as 20 bcm to Iraq by 2019. More than $2 billion was invested in the 10.5 million tonne/year Iran LNG project under former President Mahmoud Ahmadinejad.
In 2010, a number of international sanctions prompted cancellation of three LNG projects involving Total, Royal Dutch Shell PLC, Repsol Exploration SA, OMV AG, and China National Offshore Oil Corp., several of which are revisiting Iranian LNG capability.
Contact Tayvis Dunnahoe at [email protected].
