Key Role for Domestic Firms in South Pars Phase 11 Project

Qualified domestic companies can play a major role in developing Phase 11 of South Pars Gas Field in the Persian Gulf, which will be developed by France’s Total and its partners, chairman of the board of the Society of Iranian Petroleum Industry Equipment Manufacturers said.

"Although Total's officials have agreed to make maximum use of Iranian manufacturers' capacity to develop the giant project, domestic producers need to comply with certain standards to be able to have a role in the project," Reza Padidar also told ILNA on Sunday.

Total finalized a deal worth $4.8 billion in July to develop South Pars Phase 11, one of the least developed ventures among 24 phases of South Pars. The French 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 Phase 11 of the joint gas field with Qatar.

Padidar claimed that the venture can create direct or indirect jobs for up to 100,000 people through 2021, when SP Phase 11 is scheduled to be completed.

Referring to a recent meeting of Oil Minister Bijan Namdar Zanganeh with oil equipment manufacturers, the official outlined the sector's capacity to the minister and received his approval to negotiate with Total.

Pointing to last week's meeting between Total's officials and oil and gas domestic manufacturers to discuss the project's implementation, Padidar said, "The French major provided us with a list of equipment and services that should meet international standards and that is why some Iranian contractors will be required to upgrade their systems and machinery."

  Domestic Share

According to the official, as per the deal, Total is obliged to meet 51% of its requirements with the help of qualified domestic sectors before relying on foreign suppliers.

"The French firm has also agreed to share the know-how for manufacturing equipment that has not been indigenized in the country, which is a unique opportunity for Iranian enterprises to update their managerial and technical know-how," he added.

Stressing that in oil and gas deals, manufacture of equipment accounts for 60% of the whole contract, Padidar noted that platform jackets, pumps, turbines, pipes and compressors are among the most essential items.

The official also said that of the total amount of investment, some $2.5 billion will be allocated to equipment production.

Asked about holding tenders to assign domestic companies to undertake the project, he said Total is expected to announce a list of qualified firms to participate in tenders by the end of September and as soon as Iranian firms are tasked with completing 51% of the whole initiative, international enterprises will be invited for new tenders.

According to Zanganeh, Total will not build jackets or topsides, nor will it drill or manufacture equipment or pipelines.

"All these tasks will be put out to tender and qualified Iranian companies can participate in these tenders," he said.

Energy experts, including Reza Khayyamian, the head of SIPIEM, believe that elimination of  middlemen is one of the significant achievements of joining hands with international energy majors as they normally use domestic producers to meet their demand and intermediaries are marginalized.

According to the official, if foreign companies join Iran's energy industry and sign deals, many jobs will be created.