ENI to develop South Pars Phases 4, 5
Italian energy group ENI SPA signed a $3.8 billion buyback deal for the development of the fourth and fifth phases of the South Pars gas field off Iran. The project is expected to come under fire from the United States.
BRUSSELS�Italian energy group ENI SPA signed a $3.8 billion buyback deal for the development of the fourth and fifth phases of the giant South Pars gas field, the OPEC News Agency reported this week. The project is expected to come under fire from the United States.
The US's Iran-Libya Sanctions Act (ILSA) of 1996 created a means for the US Department of State to impose sanctions on any company that invests more than $20 million in Iran or $40 million in Libya. So far, however, the US has not attempted to apply the act to non-US firms that have taken on projects in either of the two countries, including France's Total SA, Malaysia's Petronas, and Russia's Gazprom, which are involved in Phases II and III of the South Pars development.
ILSA is strongly opposed by the European Union, and Brussels is backing European companies that are engaged in Iran and Libya.
ENI will take a 60% stake in the South Pars IV and V project, with the remaining 40% to be held by the Iranian company, Petro Pars. The project is expected to bring Iran some $1.5 billion dollars/year in income.
Iranian Oil Minister Bijan Namdar Zangeneh said, "This contract is the world's largest contract for natural gas development with respect to operational volume and investment in one single project."
The project will take 5 years to become operational, after which it will produce 529 MMcfd of gas, 80,000 b/d of NGL, and 1.5 million tonnes/year of LPG. Ethane will be extracted and used as feedstock in Iran's petrochemical industry.
South Pars field, in the Persian Gulf, extends into Qatari territory, where it is known as North field. There could be as many as 10 phases to the South Pars project. Phase I is being undertaken by Petro Pars (OGJ, Sept. 13, 1999, p. 30).