Total, NIOC ink South Pars HoA

French giant Total and the National Iranian Oil Co. (NIOC) have entered into a heads of agreement (HoA) for the development of phase 11 of the giant South Pars project, in the Persian Gulf.

Pouyanné, Image from Total.

South Pars, which is the world's largest gas field, sits in the shallow waters of the Persian Gulf, shared between Iran and Qatar. The project has been developed in several phases, with some two dozen phases projected.

The South Pars 11 project (SP11), with an estimated investment total of US$6 billion, is expected to have a production capacity of 1.8 Bcf/d, or 370,000 boe/d, and the produced gas will be fed into Iran's gas network. 

SP11 will be developed in two phases: The first phase will cost about $2 billion, and will consist of 30 wells, and two well head platforms connected to existing onshore treatment facilities by two subsea pipelines. At a later stage, a second investment phase will include the construction of offshore compression facilities, and is anticipated to be launched once required by the reservoir conditions, Total said.

Under the terms of the HoA, NIOC and the project partners will conduct exclusive negotiations to finalize a 20-year contract in accordance with the technical and economic terms established in the HoA, within the framework of Iranian Petroleum Contract (IPC) recently approved by the Iranian Parliament.

Total will also launch engineering studies and a call for tender process so that construction contracts can be awarded immediately upon signature of the final agreement in 2017.

According to the Pars Oil and Gas Co., the deal is expected to be finalized in the first part of 2017, in about three months, with production of first gas from SP11 to start within 40 months.

“The phase 11 would be developed in the offshore section and the productive resources of this phase would be transported to phases 6,7,8, and 12 with the help of two platforms each having the capacity of 1 Bcf of productive resources,” Pars Oil and Gas Co. said.

“Following Total’s successful development of phases 2 and 3 of South Pars in the 2000s, the group is back to Iran to develop and produce another phase of this giant gas field,” said Patrick Pouyanné, chairman and CEO of Total. “Total will develop the project in strict compliance with national and international laws and looks forward to working alongside the Chinese state-owned company CNPC in this additional international partnership.”

“This project fits with the group’s strategy of expanding its presence in the Middle East, where the origins of the Group lie, and growing its gas portfolio by adding low unit cost, long plateau gas assets,” Pouyanné said.

South Pars covers an area of about 9700sq km, with 3700sq km in Iran, and 6000sq km in Qatar.

The Iran portion is estimated to contact approximately 14 Tcm of gas reserves, and some 18 billion bbl of gas condensates, making up some 7.5% of the world’s gas reserves, Pars Oil and Gas said.

Total’s negotiations with NIOC over the development of Phase 11 also included the production of liquefied natural gas (LNG) in what was expected to become Iran’s first such project named Pars LNG. The project, however, was abandoned after the French energy giant had to quit Iran after the sanctions against Iran were intensified. It is still not clear whether the same LNG scheme will be again put on the agenda for the development of Phase 11, NIOC said.

Total will operate the SP11 project with a 50.1% interest alongside Petropars (19.9%), a 100% subsidiary of NIOC, and the Chinese state-owned oil and gas company CNPC (30%).

Read more:

Iran offers oil and gas projects

South Pars 15 & 16 near start-up

Iran fires up South Pars 12

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