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Monday, 03 July 2017 12:30

New contract to be signed in Iran Featured

New contract to be signed in Iran

Today NIOC and French Total are set to sign the first IPC contract (Iran Petroleum Contract) in Tehran for development of Phase 11 of the South Pars gas field.

It should be noted that in late May Total CEO Patrick Pouyanne said that his company intends to sign a contract for the development of Phase 11 of the South Pars gas field with Iran by the end of summer. Once implemented, this $4.8 billion project will add 56 million cubic feet of gas per day to Iran's production capacity.

He also expressed satisfaction with the new format of Iran's oil contract, Fars News reported.

“The new format of contracts in the oil sector of the country is a real improvement”, Pouyanne said.

According to Patrick Pouyanne, one of the special advantages of the new oil contract is the fact that operators will offer remuneration based on production rather than on a simple percentage of development costs.

“It also extends to 20 years, not seven or eight, which is a real improvement. We will not go to Iran unless we have a commensurate profit there”, Pouyanne said.

Total's initial investment in Phase 11 of South Pars comprised $1 billion.

According to NIOC, the project will be “in strict compliance with applicable national and international laws”.

According to the official statistics, Phases 1-10 and Phases 12, 15, and 16 are fully operational, and Phases 17 and 18 have just started production.

At present, the gas output at South Pars in Iran comprises 420 million cubic meters per day. With the commissioning of Phases 14, 17, 18, 19, 20 and 21, the total production volume is set to exceed 570 million cubic meters per day. At the same time Iran plans to produce more than 700 million cubic meters of gas per day from all 24 phases of South Pars by 2018, but the country needs $20 billion as investment to achieve this goal, Minister of Petroleum Bijan Namdar Zanganeh said earlier.

It stands to mention that the development of Phase 11 was launched in 2009. Then Tehran rejected the proposal of French Total and chose China National Petroleum Corporation (CNPC) to implement development operations. However, in July 2012 CNPC also left the project after the introduction of the sanctions.

The South Pars gas field with the area of 9.7 thousand km2 is located in the territorial waters of Qatar, but pay formations occupy the area of 3.7 thousand km2 in the territorial waters of Iran in the Persian Gulf.

The process of development has been divided into 29 phases. The field contains about 14 trillion m3 of gas, or about 8% of the total world reserves, and 50% of the proven gas reserves of Iran.

Person in charge of the newsline: Fidan Isayeva 

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