Domestic Consortium to Build SP Jacket Platforms

In line with efforts to play an active role in the development of South Pars Gas Field's Phase 11, domestic oil and gas equipment manufacturers are planning to establish a consortium for the construction of jacket offshore platforms for the gas venture, the head of the Society of Iranian Petroleum Industries Equipment Manufacturers said.

"Beside jackets—the steel frame supporting the deck and the topsides in a fixed offshore platform—the consortium will supply Total with 50% of the much-needed equipment to develop the gas field," Reza Khayyamian was also quoted as saying by ISNA on Sunday.

Total, one of the world’s seven supermajors, is in charge of developing SP Phase 11 after signing a $4.8 billion contract under the new Iran Petroleum Contract model this month.

South Pars Gas Field is shared between Iran and Qatar in the Persian Gulf.

Highlighting the Total officials' green light to make maximum use of Iranian manufacturers' capacity to develop the giant project, Khayyamian said the French company and the society have come to an agreement to use domestically made equipment to expand the field.

Pointing to domestic manufacturers' enthusiasm to finalize their cooperation deal with Total, the official said, "Such collaboration with multinationals is of great importance for the Oil Ministry as well, because of which it is also in talks with Total to conclude the agreement in the shortest possible time."

According to one of the requirements of IPC, whatever equipment that can be manufactured domestically should not be imported by foreign contractors, "otherwise, that would be a violation of IPC and foreign companies will be fined".

According to the official, IPC is the first Iranian oil contract that clearly stipulates a role for domestic oil and gas equipment manufacturers.

"Total has provided us with a complete list of equipment for the project and whatever can be manufactured by domestic companies will not be imported," he said, adding that the French firm has also agreed to share the know-how for manufacturing equipment that have not been indigenized.

  Elimination of Middlemen

Referring to the benefits of a long-term deal with Total, Khayyamian said, "The elimination of  middlemen is one of the significant achievements of joining hands with international energy majors, as they normally use domestic producers to meet demand and intermediaries are marginalized."

He believes that the new oil and gas contract with international energy majors is a unique opportunity for domestic manufacturers to enhance their managerial and financial capacities and establish joint ventures to expand business overseas.

"Should foreign companies return to Iran's energy market, scores of new jobs will be created, which will not only help raise employment rate but also plow millions of dollars into the key petroleum industry," he said.

Khayyamian noted that as long as Iranian oil and gas equipment producers do not interact with foreign firms, they will not be able to play a key role in the global energy market.  

"Teaming up with big names like BP, Eni, OMV and Total can help Iranian manufacturers expand their foothold in the increasingly saturated oil and gas market," he added, stressing that collaboration with Total will boost the pace and quality of domestic drilling operations as well as the manufacture of equipment.

According to Oil Minister Bijan Namdar Zanganeh, Total will not build jackets or topsides, nor will it drill wells or manufacture equipment or pipelines, as these tasks will be put out to tender and Iranian companies can participate in these tenders.