Drilling operations at phase 11 of the massive South Pars oil field began last week, as Iran continues to build towards the recovery of natural gas from March next year.
The oil field boasts vast gas reserves, with an estimated 14.2 trillion cubic metres of gas, alongside 18 billion barrels of gas condensate. These figures equate to 8% of the world’s gas reserves, and accounts for around half of Iran’s domestic gas resources.
The first facilities in the oil field were commissioned in 2002, and ten phases of production were completed by 2009. However recent political developments have stymied further production, such as the withdrawal of the US from the Iran nuclear deal in 2018, which effectively reimposed trade sanctions on Iran and prompted French-based Total to sell its majority stake in the phase 11 facilities. Last year, China pulled out of the project, leaving the National Iranian Oil Company (NIOC) with few foreign investors to help develop the project.
This positive development will be welcome news to many involved in the project, which has endured delays and spiralling expenses over the last two decades. Figures from GlobalData show that Iran plans to spend $21bn in capital expenditure on its oil projects between 2018 and 2021, and with limited foreign support for the South Pars phase 11 development, it is likely that this project will remain a significant financial burden for Iran.
“In total, the development plan of Phase 11 has 24 wells, two platforms and a gas flow pipeline to the coast, and the second platform will be installed in another location,” NIOC deputy chief executive Reza Dehghan told Oil Price. “The project was originally supposed to be financed by a foreign investor [but given] the existing conditions, the National Iranian Oil Company will tap internal instruments and resources like sale of participation bonds.”
NIOC plans to reach daily production totals of 57 million cubic metres of gas at phase 11, although it remains to be seen if Iran will be able to deliver these lofty targets on time.