Lack of Finance Hinders Joint Gas Field Development

Lack of Finance Hinders  Joint Gas Field Development Lack of Finance Hinders  Joint Gas Field Development

The development of Farzad A gas field, also known as Farsi block, shared between Iran and Saudi Arabia, has been halted due to financial constraints, despite a recent announcement by the oil ministry prioritizing the development of joint oil and gas fields, ISNA reported.

Back in 2012, Iran and Saudi Arabia signed a deal to develop the Farzad A field, located 110 km from southern coast of Iran, in the Persian Gulf. Two years later, an initial deal was reached with the Indian company, ONGC, to develop another part of the field, named Farzad B. Iran and Saudi Arabia also share Arash oilfield. However, shortly after taking office in 2013, Iran's Oil Minister Bijan Namdar Zanganeh ordered the talks with Indians to be halted as he could not "persuade the cabinet and the parliament" for involving a foreign company in a project that could be carried out by domestic companies at low risk.

Months later, the project contractor, Petropars, announced that it would utilize the capacities of South Pars Phase 12 to implement the project, but now, according to the managing director of the North Drilling Company, Hedayat Khademi, whose company is a shareholder in the joint venture, the development project has been put to a halt over reasons unspecified by Petropars.

The contractor, for its part, says it has stopped the project simply because of a lack of finance, citing the National Iranian Oil Company (NIOC)'s failure to repay its debts to Petropars, ISNA report added.

"We cannot pay the share of NDC until the NIOC fulfills its financial obligations to us," an official from Petropars was quoted by ISNA as saying on Tuesday. The report added that officials from Petropars and NIOC have held several meetings to iron out their differences. The NIOC has reportedly agreed to repay part of its debts so that the project on Farzad gas field will resume.     

The Farzad-B gas field may hold an estimated 21.68 trillion cubic feet of in place reserves, of which 12.8 Tcf can be recovered.