Iran signs HoA with Total, CNPC on South Pars

Iran signed a heads of agreement with French Total and China National Petroleum Corp on developing phase 11 of South Pars, the giant gas field offshore. It is expected to cost around $4.8bn and to produce 50mn m³/d.

In an era of low oil prices, South Pars is particularly attractive as an asset, as the gas is so cheap to produce. Delivering it to market though is not so easy except as LNG.

Total will be operator with a 50.1% interest alongside Petropars (19.9%), a 100% subsidiary of National Iranian Oil Company (NIOC), and the Chinese state-owned oil and gas company CNPC (30%), Total said November 8. It is expected that the final contract will be signed in early 2017.

Total said the project will be developed in two phases. The first phase, with an estimated total cost of around $2bn, will consist of 30 wells and 2 well head platforms connected to existing onshore treatment facilities by 2 subsea pipelines. At a later stage, a second investment phase, involving the construction of offshore compression facilities, will be launched when the reservoir conditions require it.

Iran’s oil ministry also announced that two platforms, each weighing 3,200 metric tons – the heaviest among all active platforms, installed in South Pars – would be installed at SP11. “The time it will take to complete the project is estimated at about 40 months from signing the contract,” state-run Pars Oil and Gas Company CEO Mohammad Meshkin Fam told Iranian news agency Shana.

South Pars processing complex

(Credit:Govt)

Under the terms of the HoA, NIOC and the project partners will conduct exclusive negotiations to finalise 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.

In parallel, Total will launch engineering studies and a call for tender process so that construction contracts can be awarded immediately upon signature of the final agreement, the company announced.

Azerbaijan desk