French oil giant Total has signed a Heads of Agreement (HoA) with the National Iranian Oil Company (NIOC) for the development of phase 11 of South Pars, the world's largest gas field, the company announced on Tuesday.
According to the statement, the South Pars 11 (SP11) project will have a production capacity of 1.8 billion cubic feet per day, or 370 000 barrels of oil equivalent per day, from which the produced gas will feed into Iran's gas network.
The SP11 project will be developed in two phases. The first phase, with an estimated total cost of around $2 billion equivalent, will consist of 30 wells and two well head platforms connected to existing onshore treatment facilities by two subsea pipelines. The second investment phase, involving the construction of offshore compression facilities, will be launched once the reservoir is up and running.
Total will operate the SP11 project with a 50.1 percent interest alongside Petropars, a 100 percent subsidiary of NIOC, with a 19.9 percent stake, and the Chinese state-owned oil and gas company CNPC with a 30 percent interest.
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, and within the framework of the Iranian Petroleum Contract (IPC) recently approved by the Iranian Parliament, the statement read.
Iran's new IPC model was devised to encourage participation from international oil companies (IOCs) to address gaps in the local Iranian market and acquire advance technologies to improve and maintain recovery in existing fields, drilling and related services.
Total will launch engineering studies and call for a tender process so that construction contracts can be awarded immediately upon the signature of the final agreement.
Chairman & CEO of Total Patrick Pouyanné explained that following the company's development of phases two and three of South Pars in the 2000s, they have returned to Iran to develop and produce another phase of this giant gas field.
"Total will develop the project in strict compliance with national and international laws. Total 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," he said.
South Pars field is one of the largest independent gas reservoirs in the world lying on the territorial border between Iran and the State of Qatar in the Persian Gulf. The field covers an area of 9,700 square kilometers, of which 3,700 square kilometers belongs to Iran. The Iranian portion is estimated to contain some 14 trillion cubic meter of gas reserves which amounts approx. to 7.5 percent of the world's gas reserves and approximately half of Iran’s gas reserves.
(Anadolu Agency)
