South Pars Phase 11 Production to Commence in 2021

Gas production from an offshore Iranian project in the Persian Gulf, which is being developed by France’s Total and its partners, will commence in early 2021, Oil Minister Bijan Namdar Zanganeh said.

“Gas extraction from Phase 11 of the South Pars field is forecast to take place in three and a half years [from now] and the phase will reach full production capacity shortly after,” Zanganeh made the statement in a televised interview late on Sunday, Shana reported.

Total, one of the world’s seven supermajors, signed a $4.8 billion contract earlier this month to develop Phase 11 of the giant South Pars Gas Field that is shared between Iran and Qatar in the Persian Gulf.                     

The French oil and gas 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 SP Phase 11.

Total holds a 50.1% majority stake in the project and its partners, CNPC and Petropars, have a 30% and 19.9% share respectively.

"The project entails drilling several wells, building two offshore platforms and laying pipelines to carry sour gas to onshore facilities for processing," Zanganeh said, adding that gas sweetening is not part of Total's commitment in the South Pars project.

Total is expected to use its know-how to build and install a 20,000-ton platform in South Pars which is "unrivaled in the region", according to Zanganeh.

The largest offshore gas platform in South Pars weighs about 3,000 tons.

The gas deal with Total is the first major collaboration between Iran and a top-flight western company since international economic sanctions were lifted last year. It also marks the return of Total to Iran's energy market after a seven-year hiatus.

Total was previously active in phases 2 and 3 of South Pars, but it ceased operations in Iran in 2010 following disagreements over contract terms as well as pressure from the French and US governments over oil and trade sanctions against Tehran.

  Opportunities

Zanganeh noted that domestic companies can claim the lion's share of operational works for Phase 11 if they prove to be competent.

"Total doesn’t build jackets or topsides, doesn’t drill wells and doesn’t manufacture equipment or pipelines. All these tasks will be put out to tender and Iranian companies can participate in these tenders," he said. The Phase 11 project will be developed in two phases. The first phase, at an estimated total cost of $2 billion, will consist of 30 wells and 2 wellhead platforms connected to existing onshore treatment facilities by two subsea pipelines, a statement on Total's website reads.

At a later stage, a second investment phase, involving the construction of offshore compression facilities, will be launched when the reservoir conditions demand it.

According to Zanganeh, Total will earn close to $13 billion by the end of the contract's 20-year term and with crude oil at $50 per barrel and gas at 20 cents per cubic meter, Iran's revenues from South Pars Phase 11 revenues are estimated to reach $85 billion.