TEHRAN (MEHR - Trend )
National Iranian Oil Company (NIOC) and China National Petroleum Corp. (CNPC) signed a 5-billion-dollar contract in Beijing on Wednesday for the development of the phase 11th of the South Pars gas field.
NIOC Managing Director Seifollah Jashnsaz said that the deal came after much delay and waste of time by Total regarding the project, the Mehr News Agency reported.
"The project will be accomplished in 52 months and aims at producing 2 billion cubic meters of natural gas and 70,000 barrels of heavy gas condensates per day," Jashnsaz explained.
He went on to note that the first phase would become operational 44 months after the contract took effect. The SP phase 11 is projected to produce 500 million cubic meters of gas per day in the first phase.
Jashnsaz also said that Paris-based Total can continue talks on involvement in the field's downstream sectors and Persian LNG project.
Iran has the world's second largest natural gas reserve, with approximately 16% of the global total.
Total first expanded into Iran in 1997 with a contract granted by Iranian authorities to develop Phases 2 & 3 of Iran's South Pars gas field. Covering an area of more than 1,300 square kilometers, South Pars is the the world's largest gas reservoir and is shared by Iran and Qatar. The Iranian part is divided into 24 phases.
Total and its two partners, Gazprom and Petronas, invested more than $2 billion in Phase 2 & 3 of South Pars which began operations at the end of 2002. Total later signed a memorandum of understanding with NIOC to develop Phase 11 of South Pars, but the investment stalled on negotiations over contract terms.
Jashnsaz, managing director of the Iranian state oil firm, also accused Total of delays and said Iran had given it an ultimatum six months ago to finalize work before Tehran moved forward with the Chinese partner.
Iran, the world's fifth-biggest oil exporter and owner of the world's second-largest natural gas reserves after Russia, on May 31 said that it plans to spend $12.3 billion in foreign currency and rial-denominated bonds during the next three years to fund the South Pars project.
In January, CNPC signed a $1.76 billion agreement with National Iranian Oil on the development of Iran's North Azadegan oilfield, which has an estimated oil reserve of 6 billion barrels.
''Total still involved in Iran gas deal''
Meanwhile, Total said on Thursday that it was still involved in the multi-billion dollar development of a major Iranian gas field, a day after Tehran announced it had replaced the French oil major by China's CNPC, Reuters reported.
"We are still involved in this project and especially in the major project of South Pars 11, combined with the liquefied natural gas (LNG) train," Jean-Jacques Mosconi, head of strategy and planning at Total, told the Reuters Energy Summit.
On Wednesday, the official Iranian news agency IRNA said Tehran had signed a $4.7 billion contract with China National Petroleum Corporation (CNPC) to develop phase 11 of South Pars, replacing Total which it had accused of delays.
Mosconi said Total, the world's fourth largest listed oil company, would remain operator in the field, which is part of the world's largest reservoir of gas.
"We are not used to enter a major project without remaining a key operator. Our role cannot change in a deep way and we will remain a key operator of the project, so this means having a key stake in the project," he said.
Total has a memorandum of understanding (MOU) with Iran's oil company NIOC to develop Phase 11 but the project was overshadowed by haggling over contract terms.
NIOC has reportedly accused Total of delays and said it had given the Paris-based company an ultimatum six months ago to finalize work before Tehran moved forward with another partner.
"I can tell you we are still in," he said, adding Total had never lost its relationship with Iranian authorities.
"For sure some Chinese companies are very active to try to play major games to gain a bigger role in Iran."