SP Projects Awaiting Investment

SP Projects Awaiting InvestmentSP Projects Awaiting Investment

South Pars development projects can be thoroughly implemented by 2018 in case the much-needed $10 billion fund is allocated, managing director of Pars Oil and Gas Company said on Wednesday.

"Based on the budget approved for 2014-15, $8.5 billion should have been spent on the South Pars development project, yet the project is still suffering from underinvestment," Ali Akbar Shabanpour was quoted as saying by Mehr News Agency.

According to the official, only $1.7 billion of the approved budget were spent on the project by November 2015. In other words, out of the whole predicted credit to complete the gas field development projects, 20% of financial resources have been allocated to it.

"Due to severe financial constraints, allocation of fund to different phases has been prioritized," he added.

Pointing to the construction operation of different phases, he noted that except for Phase 14, all other phases have made 75% physical progress.

"Some 83 billion cubic meters of gas were extracted from the gas field by November and it is predicted to rise to 130 bcm by the end of the current Iranian year (March 19, 2016)," he said.

Asked about Italian oil and gas giant Eni's proposal to invest $4 billion to develop a new phase in the South Pars field, Shabanpour said, "We have received lots of proposals from multinational oil companies to develop the project. Nonetheless, I am not informed whether National Iranian Oil Company has received any technical or investment proposal from Italy's Eni or not."

Confirming gas reservoir pressure decline in some phases, the official said geology, geophysics and gas production maintenance workgroups have been set up in Pars Oil and Gas Company to address the problem as soon as possible.

The official also said compressor stations can prevent the pressure decline in gas reservoirs. In fact, the gas field has been proved to have enough gas to be extracted for at least 30 years.

Shabanpour noted that as soon as the much-needed equipment and machinery are sent to the site, the completion of ongoing projects will be expedited.

Moreover, foreign enterprises will not have to face the limitations imposed by sanctions, as the implementation of Iran's historic nuclear deal will help them have more freedom to interact with Iran.

South Pars is the world’s largest gas field shared by Iran and Qatar, covering an area of 3,700 square kilometers of Iran’s territorial waters in the Persian Gulf. South Pars holds an estimated 40 trillion cubic meters of natural gas, or roughly 8% of the world’s reserves and approximately 18 billion barrels of condensates. It adjoins Qatar’s North Field that measures 6,000 square kilometers.

A lack of modern technology and budget has hampered the development of joint hydrocarbon fields, allowing neighbors to draw the lion's share of underground reserves.

However, officials say Iran can top Qatar's rate of extraction once all 28 phases of South Pars become operational. South Pars output accounts for more than 50% of Iran's total gas production capacity, but it is expected to rise to 75% next year.