Iran petroleum: Iran winner of Total deal

EghtesadOnline: A review of the international and technical conditions of Phase 11 shows that Iran is the winner of the international deal signed with Total Company to develop Phase 11 of South Pars gas field.

News ID: ۷۷۷۷۹۳

19 July 2017

France's Total, China's CNPC and Iran's Petropars were each seeking to develop Phase 11 of South Pars gas field. But thanks to the administration of President Hassan Rouhani, the tri teamed up for handling the job. After signing a heads of agreement, they signed a contract under Iran's new type of contracts so that a new chapter would open in Iran's cooperation with international firms for the development of South Pars after more-than-a-decade hiatus, IRNA reported.

This international consortium is expected to develop Phase 11 offshore by using pressure booster platforms which apply new technology. Experts say these platforms can enhance the sour gas pressure up to 90 bar.

Hossein Taqipour, a senior Petropars manager, says: 'Given gas pressure fall-off in some South Pars reservoirs, it is necessary to undertake measures to boost the gas pressure before delivery to refinery as this phenomenon (fall-off) will gradually engulf the entire field.'

'Therefore, Pars Oil and Gas Company (POGC) has assigned a feasibility study on the use of pressure booster platforms to Petropars. For its part, Petropars has partnered France's Doris Engineering consulting firm to consider a variety of options. These studies are currently under way on the platforms and the reservoir of Phase 12. Once studies are completed, the best option will be chosen by POGC to be applied to the entire South Pars gas field for standardization.

The options under study include boosting onshore and offshore gas pressure or combining them by using sweet or sour gas or transferring power from coasts. Since there are 24 development phases in South Pars gas field and 42 platforms, there are plans to study pressure boosting for them separately with the capacities of 500 and 1,000 million standard cubic feet per day (MMSCFD) or jointly with capacities of 2,000 and 5,000 MMSCFD.

Installing and launching pressure booster systems will facilitate gas recovery from South Pars gas field for up to 20 more years. Therefore, construction of pressure-boosting platforms at Phase 11 of South Pars will be just the beginning and Iranian companies and contractors will be able to cash in on cooperation with companies building pressure-boosting platforms for the future. For designing such platforms, necessary arrangements have been made. So far, platforms weighing up to 7,000 tonnes have been built in the country; however, Iranian contractors need to improve their potentials in order to reduce costs and duration of manufacturing and installation in their own yard.

Chief among the main equipment used in the gas pressure booster platforms is gas turbocompressor. Negotiations for choosing a suitable turbocompressor have started with an international manufacturer and efforts are under way for bringing in technical knowhow for building such equipment.

$5bn Investment in Phase 11

Phase 11 of South Pars is the most important gas project introduced for investment at a Tehran conference on the newly developed format of oil contracts. Due to its location in the South Pars reservoir, this phase is of high significance for Iran. National Iranian Oil Company (NIOC) envisages nearly $5 billion in investment for this phase.

The technical specifications of this project include the recovery of nearly 2,000 MMSCFD of gas to be processed at the refineries of phases 6-8 and 12 of South Pars.

Moreover, the offshore installations in this phase include two independent platforms, each with 12 wells to produce 1,000 mcf/d of gas, three-phase separator for testing wells, two three-phase separation units for separating water, purifier of water contaminated with oil substance before release into sea, and three-phase flare platform for emergency release. For the delivery of gas produced at this phase, there is need for two 136-kilometer 32-inch diameter offshore pipelines to transfer gas from platforms to refinery, two 136-km 4.5-inch diameter offshore pipeline for transferring glycol solution to offshore platforms, a 4.5-km 36-inch diameter pipeline and single-point mooring for loading and export of condensate.

The objective behind the delivery of gas from Phase 11 to phases 6-8 and 12 of South Pars gas field is to use the vacant capacity of refineries in these phases and accelerate production in this section of the field.

In the first stage of this project that includes building a jacket, a platform, an offshore pipeline and drilling, the gas produced offshore will be delivered to refining facilities in the phases 6-8 of South Pars. Phase 11B is technically similar to Phase 11A and the gas produced at its platform will be dispatched to the refinery of Phase 12.

Phase 11 was initially planned to produce 56 mcm/d of sour gas for Iran LNG project and provide 80,000 b/d of gas condensate.

Phase 11, From 1990s to 2010s

In the late 1990s, NIOC and Total reached agreement for the development of the upstream sector of Phase 11 of South Pars and building an LNG plant with an output of 10 million tonnes. A memorandum of understanding was signed between them. Malaysia's Petronas also expressed readiness to team up with them. A consortium of NIOC (50%), Total (40%) and Petronas (10%) was assigned the upstream and downstream development of this phase.

The agreement and relevant engineering studies came against the backdrop of growing international sensitivity towards Iran's nuclear program. From 2006 to 2008, Total did not meet its obligations on the pretext of increased steel prices and higher costs for the project. NIOC rejected Total's request for higher project costs and the French company pulled out of the project. In 2009, negotiations started between NIOC and China's CNPC and finally a $5 billion agreement was signed between these two companies. The Chinese side failed to handle the project and it was expelled in 2012. After that, NIOC turned to Petrorian Development Company, Iranian Offshore Engineering and Construction Company (IOEC) and Petropars. In September 2012, the project was awarded to Petropars. But due to financial restrictions, Petropars dropped the project.

And in the end, a Total-led consortium recently agreed to develop Phase 11.

To what extent can Total's presence help Iran develop South Pars? Due to its location in the border area of South Pars, this phase is not in appropriate conditions in terms of reservoir pressure. Taking a look at the phases of South Pars on the map would show that Qatar has long been extracting gas from its share of the field by drilling horizontal and vertical wells. Iran just started producing from the adjacent phases in the early 2000s and even in recent years. Therefore, Phase 11 is the riskiest development phase of South Pars. It needs cutting edge technology or we would see pressure fall-off and the non-utility of its offshore platforms. Total's presence in this phase will be a golden chance for Iran so that the technology of building pressure booster platforms will be indigenized to serve other South Pars platforms. That would help make up for pressure fall-off in other platforms.

Over the past four years, NIOC has spent half of its financial resources on the South Pars projects in order to accelerate the development of this giant offshore field shared with Qatar. However, there is still need for investment in order to preserve production and keep pace with the rival.

Mohammad Meshkinfam, CEO of Pars Oil and Gas Company (POGC), has said that nearly $20 billion in offshore investment would be needed to avoid pressure fall-off. Experts say Total-CNPC cooperation in South Pars would encourage other oil companies to join this phase.

Total is a company with international fame. However, it could not be immune to U.S. embargo due to investment in Iran's oil sector. Over recent years, by setting up international consortiums, Total has managed to circumvent US's D'Amato sanctions and join South Pars. CNPC's presence is for the same reason of getting around the sanctions.

Last but not least, convincing Total to invest in South Pars would not have come true without oil diplomacy exercised by Minister of Petroleum Bijan Zangeneh and other senior oil officials.
SOURCE: Iran Petroleum