Iran plans to boost gas output in 2022, including from delayed South Pars

Iran will bring on stream 130 million cu m/d of additional gas production capacity in 2022, including from the delayed phase 11 of the offshore South Pars field and emergency onshore operations as domestic consumption overtakes production, the state media said Dec. 21.

"Development of phase 11 is our priority. Next year, a part of gas production from phase 11 will come on stream. We will use the free capacity of other phases for sweetening [processing] the produced gas and also phase 12's platform," Mohsen Khojastehmehr, managing director of the National Iranian Oil Co., was quoted as saying by the students news agency ISNA.

The total production from phase 11 will be 56 Mcm/d, 80,000 b/d of gas condensate and 400 mt/d of sulfur.

Development of phase 11 in the giant field shared with Qatar, where it is known as the North Field, has been delayed for more than a decade because of the US sanctions that barred foreign companies from executing signed contracts.

"The first train of phase 14 of South Pars with sweetening [gas processing plant] capacity of around 12 Mcm/d will be operational too," he said. Production in phase 14 equals to the phase 11, he added.

US sanctions

TotalEnergies was the last Western oil major to attempt developing South Pars, but left Iran in August 2018 after the US withdrew from the Iran nuclear deal in May of that year and announced it would reimpose sanctions on Tehran.

The company unsuccessfully sought a US waiver from the sanctions.

US sanctions prohibit any companies from using the US financial system to do business with Iran, a major restriction that affects practically all western firms, due to the dominance of the US dollar in global transactions.

At the time of leaving Iran, TotalEnergies said it had invested less than Eur40 million in the $4.8 billion South Pars project, which was scheduled to come online in 2021 with a production capacity of 2 Bcf/d of gas and 70,000 b/d of condensate.

It transferred its 50.1% stake in the project to Chinese company CNPC. A year later CNPC sold its stake to Iranian contractor Petropars, which is the current operator of the project.

More gas projects

Another offshore gas field and parts of the Iranian Central Oil Fields Co., or ICOFC, will contribute to the plan for boosting the gas production capacity, the oil ministry's news agency Shana said Dec. 21.

"The first phase of Kish gas field and also new gas production capacity increase in around 10 emergency projects are on the agenda. We have started the tenders for the ICOFC," Khojastehmehr said. The first phase of Kish will produce 28.3 Mcm/d, ISNA reported in 2019.

The country is planning to raise its gas production capacity from close to 1 Bcm/day to 1.5 Bcm/day over an 8-year period, Khojastehmehr said.

Iran, which sits on the world's second largest gas reserves after Russia, has ambitious exports plans of the commodity. However, high household consumption among other reasons has been a barrier. Tehran has cut gas sales to Iraq to 8 Mcm/d from 49 Mcm/d to supply gas to its power plants. Baghdad also owes Iran billions in dollars in unpaid gas bills due to US financial sanctions imposed on Tehran.

Turkmenistan gas deal

A gas import deal from Turkmenistan is "getting finalized" while Tehran is "in talks" with Turkey to extend gas exports contract to Ankara, Khojastehmehr added.

A contract for 1.5 Bcm to 2 Bcm of gas a year was signed during Iran President Ebrahim Raisi's visit to Turkmenistan, Iran's oil minister Javad Owji said on state television on Nov. 29. Imports had been halted since the winter of 2017, he added.

Iran and Turkmenistan had a gas fee payment dispute, which led to the supply cut by Turkmenistan. Due to banking sanctions set on Tehran, Iran was not able to settle its gas bills to the country. The previous Turkmenistan-Iran gas deal involved exports of 8 Bcm/year of gas.

Meanwhile, Turkey's state gas importer Botas imports the commodity from Iran under a 1996 contract for 9.6 Bcm/year, which runs to 2026.