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Breaking News:

Oil Climbs On Major Crude Draw

Iran To Boost South Pars Gas Output Via 4 New Phases

Iran’s President Hassan Rouhani officially launched four new development phases at the giant South Pars offshore gas field, which will add 110 million cubic meters to the daily output of the field. The expansion cost US$11 billion, Reuters reports.

Last week, Petroleum Minister Bijan Zanganeh said South Pars will produce from 27 phases of development within a year. He added production from the field—the world’s largest—would reach more than 750 million cubic meters later this year. Iran’s total to date stands at 841 million cubic meters daily, which should rise to 880 million cubic meters daily by next March and 950 million cubic meters daily in the year after that.

South Pars was supposed to be developed by French Total and Chinese CNPC in partnership with the local national oil company. However, when U.S. sanctions snapped back last November, Total was forced to retreat and quit the project. At the time, expectations were that CNPC would take over its 50.1-percent share in the project and continue working on it on its own. However, the Chinese state giant also has substantial exposure to the U.S. banking system, which effectively put a stop to work on Phase 11.

Now, Zanganeh says, Iran is in talks with the Chinese company to resume work on the project as China is a major destination for Iranian gas.

Related: How The Californian Oil Boom Died

The South Pars field is the biggest gas deposit in the world, shared by Iran and Qatar. The 20-year development project, of which Total and CNPC were a part of, envisaged bringing gas production from the field to 2 billion cu ft of gas daily. Now, Iran is going it alone, apparently, and planning more exports.

First, however, it needs to settle an export dispute with Pakistan, one of the world’s fastest-growing gas markets.

“As far as gas exports to Pakistan are concerned, legally speaking, we are in the position of claimant, and they also have political excuses, saying they are under pressure from the UAE and Saudi Arabia, but we have a valid contract; Pakistan cannot find any gas cheaper than Iran’s,” Zanganeh said this weekend.

By Irina Slav for Oilprice.com

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