Iranian Firms Can Supply Equipment in South Pars Phase 11

Iranian firms have the capacity to provide up to 70% of equipment needed by South Pars Phase 11, which is due to be developed by France’s Total and its partners, chairman of the board of directors of Iranian Petroleum Industries Equipment Manufacturers Association said.

“Total is yet to determine in what sections it wants to use domestic equipment. But the French oil and gas giant is currently vetting Iranian companies, the number of which has so far reached 80,” Reza Padidar was also quoted as saying by ILNA on Wednesday.

Total finalized a deal worth $4.8 billion in July to develop South Pars Phase 11, one of the least developed ventures among 24 phases of South Pars. The French company will collaborate with China National Petroleum Corp and Iran’s state-owned firm Petropars to produce 2 billion cubic feet or 56 million cubic meters per day of natural gas from Phase 11 of the joint gas field with Qatar.

Ruling out speculations, based on which Total does not intend to use Iranian parts in the South Pars project, Padidar said that work has not started, so no one can say whether it will or won't use Iranian manufacturers’ potentials.

“The European company has defined preconditions for domestic firms, such as Iranian companies having their accounts audited, meeting standards and obtaining international certificates,” he added.

According to Padidar, senior officials from Total or the National Iranian Oil Company have not confirmed the speculations.

This is while Mohammad Reza Nematzadeh, the Oil Ministry’s chief industrial advisor, criticized Total’s “unwillingness” to utilize Iranian pipeline manufacturing companies in a letter to Bijan Namdar Zanganeh on January 1.

Nematzadeh said the French company was trying to use foreign companies instead of local ones under the pretext of the Iranian firms’ low safety standards and the risk of a six-month delay if it commissions domestic manufacturers.

Domestic Potential

Padidar noted that local manufacturers are capable of building electrical equipment and valves, as well as some of the 10 strategic goods defined by the ministry for indigenization.

As per the deal, Total is obliged to meet 51% of its requirements from qualified domestic manufacturers before relying on foreign suppliers.

The French firm had also agreed to share the know-how for manufacturing equipment that has not been indigenized in the country.

Officials claim that Total’s venture can create direct or indirect jobs for up to 100,000 people through 2021, when SP Phase 11 is scheduled to be completed.

Stressing that Total’s subcontracts will be confidential, Padidar said Italian oil and gas company Eni and Pergas Consortium, a group of international energy firms, have held negotiations with domestic manufacturers on providing equipment for exploration and production projects in Iran.