Iranian Firms to Handle Bulk of South Pars Phase 11 Works

Most of the subcontracts to develop Phase 11 of the South Pars Gas Field in the Persian Gulf will be awarded to domestic companies, the chief executive officer of Pars Oil and Gas Company said.

"As soon as France's Total, as the main contractor, concludes official formalities, subcontracts for the gas projects will be finalized, most of which will be awarded to Iranian firms," Mohammad Meshkinfam was quoted as saying by the National Iranian Oil Company's news portal on Monday.

Signed last July, the $4.8-billion 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.

According to the official, most of the works for Phase 11 are planned to be handed over to local companies.

"Total is assessing the qualification of winners, a majority of which are local firms, and it will sign a contract with them by the end of the current [fiscal] year [on March 20] and works will begin subsequently," he said.

"Most sectors, namely the construction of the jacket, topsides, subsea pipelines and the platform, were put out to tender and the winners will be announced soon."

Asked about drilling operations, he noted that plans are in place to hold drilling tenders in the near future as operational procedures are expected to commence by mid-2018.

Meshkinfam said close to $50 million have been expended on the mega project for conducting surveys and providing much-needed management skills.

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.

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

Planned Venture

According to Oil Minister Bijan Namdar Zanganeh, Total is managing the venture as planned and there are no indications that they may abandon the project.

"Except for drilling, other subcontracts worth $1 billion will be finalized by the yearend," he added, noting that if the project consortium, including Total, China National Petroleum Corporation and POGC, does not invest $500 million in the project in a year and a half, NIOC is allowed to terminate the deal unilaterally without compensation.

Attaching great importance to the role of domestic firms, the official added that more than 80% of the subcontracts will be drawn up with Iranian enterprises, which can facilitate technology transfer to the country.

According to Reza Padidar, chairman of the board of the Society of Iranian Petroleum Industry Equipment Manufacturers, as per the deal, Total is obliged to meet 51% of its requirements with the help of qualified domestic sectors before turning to 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 said.

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