Iran plans $17 bil upgrade at South Pars natural gas field

Iran signed March 8 a $17 billion contract with domestic companies to boost pressure in its offshore South Pars gas reserve, shared with Qatar.

The contract follows a difficult winter when Iran had to cut off power on household and industrial users due to a gas and fuel shortage.

"Qatar has moved towards pressure enhancement since a few years ago by placing order for required platforms and turbo compressors and it will be able to reach this possibility within the next two years," oil minister Mohsen Paknejad said in the ceremonial speech on state television.

"This means not only the pressure goes up on Qatar's North Dome side, a part of the gas on the Iranian side will also move to Qatar due to the pressure difference. This shows the importance of implementation of the pressure boost project in Iran more than ever," Paknejad said.

From 2027 onward, around 28 million cu m/yr, or one phase of the South Pars, will decrease. Two years later, from 2029 this decrease will go up to around 42 million cu m.

The move will also help gasoline production as the gas condensates from South Pars account for production of 40% of the country's gasoline at over 100 million l/d.

National Iranian Oil Co. signed the deal with four leading Iranian general contractors including Petropars, Oil Industries Engineering and Construction (OIEC), MAPNA, and Khatam al-Anbiya Construction Headquarters.

The project consists of seven pressure boost points, each worth $2.5 billion and equipped with six platforms that individually house four compressors. "Totally, 56 turbo compressors are needed," Paknejad said.

Each platform will house four turbo-compressors, totaling 56 high-capacity compressors across the seven hubs. Most of the equipment will be domestically sourced, with some assistance from foreign partners and technology transfer.

In 2017, National Iranian Oil Co. signed a contract with France's TotalEnergies and China's CNPC to develop phase 11 of South Pars, while planning to carry out pressure enhancement under the contract. However, US sanctions against Iran's energy industry made both companies pull out of the deal. Iran, which was deprived of advanced technology, has not been able to find another international replacement.

Also last year, four preliminary contracts with Iranian companies were signed which did not progress.

The international pressure on Tehran over its nuclear program has also hit its foreign investment.

"In order to reach a gas production of 1.34 billion cu m/d over the next four years, we need an annual investment at $19 billion," Paknejad said. Using oil money savings as well as bank resources and selling bonds are ways that Iran has been financing its energy projects.