SP Completion Will Boost Iran’s Bargaining Power

SP Completion Will Boost Iran’s Bargaining PowerSP Completion Will Boost Iran’s Bargaining Power

The completion of South Pars Gas Field's phases in the Persian Gulf will bestow Iran a higher bargaining power in negotiations over gas export to regional customers, including Turkey, Iraq and Pakistan, managing director of Iran’s Offshore Engineering and Construction Company said.

Referring to IOEC’s drilling project in Phase 14 of South Pars, Gholamreza Manouchehri said each phase of South Pars produces about 25 million cubic meters of gas per day, 40,000 barrels of gas condensates and 1,500 tons of ethane upon completion, ILNA reported.

Manouchehri added that the completion of all the 28 phases of SP translates into a daily production of over 1 million barrels of gas condensates.

The official noted that when the construction projects, which are being implemented in Khorramshahr fabrication yard, are completed, the infrastructure can add 100 million cubic meters of natural gas and also 150,000-160,000 barrels of condensates to Iran’s daily production capacity.

According to the official, the added gas and condensates production from the four phases under development will bring in approximately $3.6 billion and $2.2 billion in annual revenues, respectively.


  IOEC’s Projects

The IOEC chief said the company has implemented 70% of SP’s offshore projects, adding that in the past two years, the platforms of phases 12 and 15-18 have been installed and six pipelines were also tested and became operational.

Manouchehri said the company is currently laying the subsea pipeline of Phase 14, the first stage of which is expected to be complete in 20 months.

“In the past, offshore installations were wholly designed and installed by foreign companies, but now establishing subsea pipelines are considered routine projects for IOEC … The company implements all offshore pipelines projects in the South Pars,” he said.

Manouchehri said before the imposition of sanctions, each imported pipeline cost the country $1 billion, but it is currently constructed domestically.

He stressed that Iranian EPC (engineering, procurement and construction) companies have met a proper growth in the last few years, adding that they are expected to have a 40% reduction in their costs in the post-sanctions era.

“Thus, Iranian companies must not be eliminated [from potential projects], but become more efficient,” he said.

Referring to delays and high costs inflicted on the Persian Gulf country due to the US-engineered sanctions, he noted that Iran could not purchase some goods from the main manufacturer, thus brokers took advantage and sold them at very high prices.

Manouchehri underlined that IOEC recently signed a memorandum of understanding with a Norwegian company named Aker Solutions, which is a leading corporation in oil and gas platforms industry.

Branding the technology employed in South Pars as belonging to the 1990s and blaming sanctions for not updating it, the official said it is urgent to employ foreign technology.

About Iran’s new oil and gas contract framework –aka Iran Petroleum Contract— Manouchehri said IPC is different from the earlier buyback contracts in the time contractors receive money.

"In the past, they received money at the end of a project, while IPC allows them to raise money when the project starts production," he said.