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Kish to Turn Into Gas Hub
Energy

Kish to Turn Into Gas Hub

The National Iranian Oil Company is looking for investors to develop its second largest natural gas field, as its first phase of development nears completion, ending the decade-long delay in the development of the giant reservoir.

Following the investment, it can produce as much as a fifth of South Pars Gas Field's output, the world's largest holding 19% of recoverable gas reserves, and become a major gas hub in the region, chief executive of state-owned Petroleum Engineering and Development Company said.

"All of the first phase's projects, apart from the processing unit, are operational and we are re-drilling the field's 13 onshore wells," Abdolreza Haji-Hosseinnejad told Moj News Agency.

Unlike South Pars, Kish is completely inside Iranian maritime borders in the Persian Gulf, near the Strait of Hormuz. Thus, Oil Minister Bijan Namdar Zanganeh has put the field's development as a second priority, behind extracting from South Pars which is shared with Qatar.

The field's development has been delayed since the start of development in 2012, with NIOC executives changing contractors for Kish's development.

PEDEC plans to develop the field in three phases at an estimated cost of $2.2 billion.

The first phase is expected to be operational by November 2015, according to Iranian news agencies.

Drilling operations on this phase began in August 2012. The first phase of the field is expected to produce 85 to 141 million cubic meters of gas, 45,000 barrels of gas condensates and 82 million cubic meters of low-density gas per day.

The National Iranian Oil Company discovered Kish gas field in 2006. As the world's fifth biggest offshore gas field, Kish is estimated to hold 1.9 trillion cubic meters of gas in place, of which 1.4 trillion cubic meters are recoverable. The field also holds at least 1 billion barrels of condensate, of which at least 331 million barrels are recoverable.

Kish's gas is sweet and has the potential of producing four billion cubic meters of natural gas per day.

  Financing

"The NIOC is looking for foreign investors to develop the second and third phases of Kish, which will be offshore. So the field's further expansion has been postponed till the lifting of sanctions against Iran," Haji-Hosseinnejad said.

"The field will be showcased to foreign investors at a London conference on the Iranian petroleum industry later this year."

In July 2010, NIOC signed a $10 billion deal with a domestic consortium for the development of the field. The Bank Mellat consortium provided financing for the project.

The funding for upstream activities was handled by NIOC and downstream by a consortium of Iranian banks and financers.

  Installations and Infrastructure

Phase I of Kish gas field will include a development plan to enable production of 1 billion cubic feet of gas from the reservoir.

The expansion included drilling of 13 production wells, overhauling of one onshore well and construction and installation of two drilling rigs. It also includes construction of refinery facilities, gas transmission pipelines, reservoirs and infrastructure facilities such as electric power plants, water treatment plants, an industrial effluent treatment plant and roads. Four delineation wells will be drilled, with two of them 6 km southwest of Kish Island.

Geological studies on the reservoir, examination and evaluation of surface facilities and economic feasibility studies for the field were also performed during the first phase of the project.

The second and third development phases of the field will each produce 1 billion cubic feet of gas per day when completed.

Pipelines will be constructed to allow transportation of up to 3 billion cubic feet of gas per day. The pipelines will transport sour gas to the mainland refineries for processing, which have a processing capacity to produce 76.5 million cubic meters of light gas and 45,000 barrels of condensate.

The Kish gas refinery will be built in the mainland Garzeh region near Aftab Port to reduce environmental impacts on Kish Island.

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