Total unveils novel scheme for South Pars

Feb. 9, 1998
South Pars development layout [52,947 bytes] France's Total SA has worked out what it claims to be an innovative production scheme for the development of South Pars gas field off Iran. The field, in which Russia's Gazprom and Malaysia's Petronas are partners, is scheduled to go on stream in 2001. It also is the center of a controversy involving U.S. sanctions targeting investment by any company-including non-U.S. companies-in Iran's oil and gas sector. More developments on that
France's Total SA has worked out what it claims to be an innovative production scheme for the development of South Pars gas field off Iran.

The field, in which Russia's Gazprom and Malaysia's Petronas are partners, is scheduled to go on stream in 2001. It also is the center of a controversy involving U.S. sanctions targeting investment by any company-including non-U.S. companies-in Iran's oil and gas sector. More developments on that situation came last week.

Development details

For purposes of development, Total has divided the block into two areal zones, or "phases."

For each of these phases, Total will install a minimum-facilities platform for drilling 10 wells. No separation or treatment of South Pars production of natural gas, condensate, and water will occur on either of the two platforms. Each platform is designed to produce 1 bcfd of gas, ultimately developing 8 tcf in each phase.

South Pars production will be transported "wet" via a 32-in. pipeline to the onshore As Saluyeh gas treatment plant 100 km away. The pipeline installation will involve special corrosion-prevention measures, Total said, without elaboration.

The treatment complex will account for half of the project's overall $2 billion investment.

The project's peak output of natural gas is intended for delivery to domestic Iranian markets, for use in electric power plants and in oil field gas lift schemes.

Sanctions update

Meanwhile, controversy continues to roil around the U.S. sanctions law.

Total Pres. Thierry Desmarest told a press conference that his company had "won a battle" over the so-called D'Amato law, drafted by U.S. Sen. Alfonse D'Amato (R-N.Y.). The situation might change, he added, and sanctions could still be forthcoming.

But, he noted, the Iranian South Pars contract has sparked off a debate in the U.S. as to whether such unilateral sanctions have more disadvantages than advantages.

This did not mean the law would be scrapped, he said. But, 4 months after the contract's signing, there still has been no position taken by the administration of U.S. President Bill Clinton with regard to imposing sanctions as a result of the South Pars contract: This shows the extent of their dilemma, Desmarest said.

However, shortly after Desmarest made his comments, the Clinton administration said that it soon will rule that Total, Gazprom, and Petronas are "sanctionable" under the D'Amato law.

Washington sources say the three companies will be given 90 days to amend or cancel the contracts, followed by a second 90-day postponement.

Under the Iran and Libya Sanctions Act, the U.S. government would impose economic sanctions against countries if they-or companies based in those countries-invest more than $20 million/year in Iran's petroleum industry.

The U.S. started its review of the South Pars contract last summer, shortly after the Total group disclosed the project.

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