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Turkey Opts Out of Iranian Gas Project

The Turkish state-owned upstream oil and gas operator TPAO will not undertake any investment in Iran's massive South Pars gas field even as the oil and gas multitudes line up at Iran’s door.

Following the visit of Turkey’s diplomatic and business delegation to Iran in late January, Turkish Energy Minister Taner Yildiz said that having looked at the feasibility of TPAO investing in Iran's South Pars gas field, the government had decided it was not in the company’s best interests.

“As it stands at the moment there has been no decision for TPAO to invest in Iran. If Iran wants to make a new proposal with new conditions we will look at it," Yildiz was quoted as saying.

Related Article: Turkey Finds High Grade Oil on its Border with Iraq

In 2007 and 2008, two countries signed a series on non-binding agreements under which TPAO would invest $3.5 billion to develop three blocks in South Pars, each of which were expected to produce around 25 billion cubic meters of gas annually.

What Yildiz did not mention was another agreement that would see TPAO construct a some-2,000-kilometer pipeline to transport Iranian gas to Turkey, both for domestic consumption and re-export to Europe.

According to media reports, this agreement had actually landed Turkish company Turang Transit Tasimacilik on the US blacklist of companies believed to be violating the sanctions regime with Iran. The Turkish government had issued Turang the license to build the pipeline to export Iranian gas across Turkey and Europe to Germany.

The Turkish Energy Minister also refrained from referencing the sanctions regime against Iran.

Related Article: Western Energy Companies to Re-enter Iran’s Oil and Gas Sector

The South Pars gas field, the world’s largest, is a key development priority for the Iranian government. The field, located in the Persian Gulf on the common border between Iran and Qatar, is estimated to contain 14 trillion cubic meters of gas plus 18 billion barrels of condensates.

The field covers an area of 9,700 square kilometers, 3,700 square kilometers of which lie in Iran's territorial waters in the Persian Gulf while the rest are located in Qatar's territorial waters. In late December, Qatar offered to help Iran develop its segment of the gas field.

Iran is set to start pumping natural gas from Phase 12 (out of 28 planned phases) of South Pars soon. This phase will be the biggest in terms of operations, investment and production. Once operations, this phase could produce some 75 million cubic meters of gas pumped into the national gas network annually.

By Charles Kennedy of Oilprice.com

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