South Pars Phase 11 Subcontracts to Be Awarded by March

Iran's milestone gas deal with French energy giant Total is expected to take a leap forward by March next year, as Tehran is speeding up efforts to award the project's subcontracts.

"Based on plans, all subcontracts to develop Phase 11 of South Pars Gas Field should be awarded by the end of the [fiscal] year [on March 20, 2018] and works will subsequently begin," said Rasoul Fallahnejad, a deputy at Pars Oil and Gas Company who oversees the Phase 11 project.

He said the $5-billion venture in the giant Persian Gulf gas reservoir, which has the French energy group as a majority stakeholder, is moving forward ahead of plans.

"The first production should begin within 40 months [after the start of operations] … We have progressed ahead of schedule," Fallahnejad said. "We have done in five months what typically took 15 months in previous projects."

Designed to produce 56 million cubic meters of natural gas per day, SP Phase 11 is expected to come on stream by early 2021.

Fallahnejad explained that Phase 11 projects, including the construction of platforms and jackets, will be subcontracted through tenders.

Oil Minister Bijan Namdar Zanganeh said earlier in the year that most of the works for Phase 11 are planned to be handed over to local companies.

"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," Zanganeh said.

The offshore venture will be developed in two phases. The first phase, at an estimated cost of $2 billion, will consist of 30 wells and two wellhead platforms connected to onshore treatment facilities by two subsea pipelines.

Signed in early July, the gas deal with Total marked the return of the first topflight western oil company to Iran after the easing of international economic restrictions in 2016.

The world's fourth-largest oil company was 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.

China's state oil and gas company CNPC and Iran's Petropars also hold a stake in SP Phase 11 project.

CNPC is mulling over plans to buy Total's stake if the French group drops out of the project to comply with new potential US sanctions against Tehran, Reuters reported last week, citing CNPC officials who did not want to be identified.