Iran awards $21 billion in domestic contracts to develop South Pars

摘要

The Iranian government has awarded contracts worth $21 billion for the development of the giant South Pars field to domestic companies – in what some observers are seeing as a response to the latest round of sanctions imposed by the UN Security Council. However, experts doubt that Iran will be able to develop LNG projects without the help of foreign majors.Contracts to develop six phases of the South Pars gas field (13, 14, 19, 22, 23 and 24) were signed on Wednesday, Pars Oil and Gas Company (POGC) reported on its website today. The company oversees development of the field, which holds around half of Iran’s proved reserves.Last week, state media said Iran had ended talks with Anglo-Dutch major Shell and Spain’s Repsol for the development of phases 13 and 14 of South Pars (see Gas Matters Today, June 7). The contract to develop phase 13 has since been assigned to a consortium comprising Mapna, marine services company Sadra and Petro Pidar, with phase 14 assigned to a consortium consisting of Industrial Development and Renovation Organization (IDRO), National Iranian Drilling Company (NIDC) and Iran Offshore Engineering Construction Company (IOEC).The aim of these two developments is to boost sour gas output from the field to 3 Bcf/d and to build a new gas processing plant in the Pars Special Economic Energy Zone. The intention is for the produced gas to be sweetened and then liquefied for export. However, Iran is likely to need US or European expertise and technology to develop the onshore LNG project (see Gas Matters, April Issue).Neither Shell nor Repsol were prepared to confirm their current positions in Iran. However, in its latest annual report Shell says: ““Negotiations on commercial issues continued to make progress in 2009. During 2009 we have also looked to mature the technical basis of the project, including front-end engineering and design work for the offshore facilities and for the liquefaction plant . . . When we come to make a final investment decision we will take political considerations into account. Naturally, we are following international developments closely and keeping a wide range of governments and other stakeholders informed.”Development of phase 19 was assigned to the Petropars Company and Iran Offshore Engineering and Construction Company (IOEC), while phases 22, 23 and 24 were awarded to Petro Sina Arian and Sadra, POGC reported.Many of the companies which secured contracts are connected with Iran’s right-wing political elite. For example Khatam al-Anbiya, the engineering arm of the Iranian Revolutionary Guard Corps, holds a 51% stake in Sadra, which has been awarded South Pars phases 13, 22, 23 and 24. Khatam al-Anbiya was directly targeted under the new, stricter sanctions imposed by the UN Security Council last week.In addition to the UN sanctions, both the EU and the US have proposed their own measures to cut investment in the country’s oil and gas sector in order to pressure president Mahmoud Ahmadinejad into halting Iran’s nuclear development programme (see Gas Matters Today, June 15). The US believes the Islamic Republic intends to develop nuclear weapons, but Iran insists its intentions are peaceful and its nuclear capabilities will be used solely for power generation.The immediate impact of the sanctions, rather than forcing Ahmadinejad into submission, have only served to embolden his anti-western stance. "Today, we see [Iranian] contractors with daring and self-reliance shouldering the burden," the president was quoted as saying by state media.An industry analyst told Gas Matters Today: “Iran has a track record of making announcements like this when a new round of sanctions has been agreed. The petroleum minister has been making grand claims about how many phases of South Pars will be completed by the end of the next five-year plan, which ends in 2015.“That said, Iran's economy is in better shape than it was thanks to oil prices bouncing back so it probably can afford to develop more pr