Production hits snag, costs doubled at Iran's South Pars

Production hits snag, costs doubled at Iran's South Pars

Dalga Khatinoglu, Trend Agency's Iran Service Department Chief

The Oil Ministry of Iran has announced that $46 billion had been spent in 3 years (March 2010-March 2013) to develop new 15 phases of the South Pars gas field (Phases 11 to 24), and $30 billion more is needed in the current Iranian calendar year, which began on March 21.

According to official reports, Iran has spent $16 billion, $20 billion and $10 billion respectively during the past three solar years on the giant South Pars joint gas field with Qatar.

The Iranian sector of the field holds about 14 trillion cubic meters of gas and its first inaugurated 10 phases are producing about 242 mcm of gas per day.

Akbar Torkan, the former oil minister and the advisor to president-elect Hassan Rohani, says developing the gas field's 15 new phases (Phases 11 to 24) had been projected to cost less than $40 billion.

In an interview with the Mehr News Agency on Monday, Torkan criticized the significant rise in the development costs, saying that $46 billion has been invested, but even a single phase has not yet come on stream.

On March 9, 2009, Iranian President Mahmoud Ahmadinejad inaugurated the phases 9 and 10 with half-production capacity. Since then, the two phases have not produced natural gas at their total capacity.

Just 18 of 24 wells in the two phases are being operated, producing 42 million cubic meters of gas instead of 50 mcm which had been planned.

Ten phases of the gas field came on stream during the presidency of Mohammad Khatami and the first term of Mahmoud Ahmadinejad. Due to the withdrawal of western companies from Iran, the development of other phases was handed over to Iranian companies. The Chinese CNPC was projected to develop the phase 11, but its contract was canceled in March 2013 with no progress in work.

According to Torkan, contracts for developing the new phases were signed at least three years ago. Development of the phases 12, 15, 16, 17, and 18 cost around $17 billion, and the 10 other phases, which had been transferred to domestic companies within 35-month contracts, had been estimated to cost $22.5-$23 billion, meaning that all the phases would be developed for less than $40 billion.

Torkan, former managing director of the Pars Oil and Gas Company said that some $46 billion has been invested into 15 South Pars field phases by the end of the past Iranian year (March 20, 2013).

Meanwhile, the National Iranian Oil Company has recently announced that $30 billion worth of investments is needed for the mentioned 15 phases is needed in the current year. However, none of the phases is ready to come on stream yet.

Torkan went on to say that officials of the Oil Ministry had claimed that the international sanctions had no effect on the development of the South Pars, but the fact is that the sanctions have raised costs to a great extent while none of the phases is ready to be inaugurated.

Officials should be held accountable for the huge costs which have been imposed by the sanctions, he added.

A contract was signed on June 15, 2010 for the development of eight phases of the gas field within 35 months. But, the overall progress of the work has not exceeded 65 percent after three years.

According to plan, it is estimated $4.5 billion investment for each pair of standard phases in South Pars, namely about $23 billion should be spent for developing 10 phases, which named as 35-month development contracts including phases 13, 14, 19, 20,21, 22, 23, 24 (and later the phases 27 and 28).

Development process of the phases 27 and 28 have not been started, while based on official announcement of the Pars Oil and Gas Company in April, some of the South Pars phases have been partially completed (phase 13 by 61 percent, 14 by 47 percent, 19 by 61 percent, phases 20-21 by 46 percent, and phases 22-24 by 60 percent).

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