Total, CNPC Sign $4.8b Gas Agreement with NIOC
Tehran hopes to raise its natural gas output from South Pars to 900
million cubic meters per day by March 2017 to match Qatar’s rate of
extraction and ramp up production by a further 100,000 cubic meters
a day in the following year.
National Iranian Oil Company on November 8 signed a preliminary $4.8 billion
agreement with Total S.A. and China National Petroleum Corporation to
develop Phase 11 of South Pars Gas Field in the Persian Gulf.
Petropars, a subsidiary of the NIOC, will be part of the project with a 19.9
percent stake. Total would be the majority shareholder with a 50.1 percent
and CNPC has a 30 percent stake, media reports said.
“Total says it can raise gas production (from Phase 11) to around 51 million
cubic meters per day in 20 years. Improving the rate of recovery is the most
important aspect of collaboration with Total and CNPC,” Gholamreza
Manouchehri, the deputy head of NIOC, said.
Early production is expected to begin 40 months after the start of
He added that Phase 11 holds around 16 billion cubic meters of natural gas
and some 834 million barrels of gas condensates, a type of ultra light
“Average recovery rate of Iran’s oil and gas fields is around 25 percent but
we need to enhance the rate to 40 percent in 15 years which would increase
the value of total oil and gas reserves by $6 trillion.”
“This is an agreement in principle. The final contract will be signed early
2017,” Reuters quoted the managing director of Pars Oil and Gas Company,
Mohammad Meshkinfam, as saying.
According to a statement on Total’s website, the Phase 11 project will be
developed in two parts. The first, with an estimated total cost of $2
billion, will consist of 30 wells and two well head platforms connected to
existing onshore treatment facilities by two subsea pipelines.
The second part, involving the construction of offshore compression
facilities, will be launched subject to reservoir conditions.
The agreement is the latest attempt to complete one of the least-developed
phases of South Pars which has been plagued by years of procrastination.
Total had designed the well heads for Phase 11 but did not get involved in
the operational works following the increase in tensions between Iran and
the West over Tehran’s nuclear program.
“Following Total’s successful development of phases 2 and 3 of South Pars in
the 2000s, the group is back to Iran to develop and produce another phase of
this giant gas field. Total is delighted to have been selected by NIOC,”
Patrick Pouyanne, chairman and the chief executive officer of Total, who was
absent in the signing ceremony, said in a statement.
“This project fits with the group’s strategy of expanding its presence in
the Middle East … and growing its gas portfolio by adding low unit cost,
long plateau gas assets,” Pouyanne said, stressing that the French energy
group will develop the project “in strict compliance with national and
Tehran hopes to raise its natural gas output from South Pars to 900 million
cubic meters per day by March 2017 to match Qatar’s rate of extraction and
ramp up production by a further 100,000 cubic meters a day in the following
South Pars is
the world’s largest gas field, shared between Iran and Qatar, covering an
area of 3,700 square kilometers of Iran’s territorial waters in the Persian
Gulf. The field is estimated to contain 14 trillion cubic meters of gas and
18 billion barrels of gas condensate. It adjoins Qatar’s North Field, which
measures 6,000 square kilometers.