• Natural Gas News

    Iran to go it alone at offshore gas field


Iran's national oil company has handed a contract to one of its subsidiaries to develop a field that had been earmarked for Indian investors.

by: Joseph Murphy

Posted in:

Natural Gas & LNG News, Middle East, Top Stories, Middle East, Premium, Corporate, Exploration & Production, News By Country, Iran

Iran to go it alone at offshore gas field

Iran has awarded a $1.78bn contract to a state-owned subsidiary of the National Iranian Oil Co (NIOC) to develop the Farzad-B gas field in the Persian Gulf, the oil ministry-run Shana news agency reported on May 16.

Petropars, Iran's leading general contractor, received the buyback contract from its parent NIOC. The field is expected to produce 28mn m3/day of sour gas over five years from reserves shared with Saudi Arabia. NIOC estimates the field's reserves at 23 trillion ft3 (651bn m3) of in-place gas and 115mn barrels of condensate. Its production will be processed at facilities at South Pars. 

Prior to the US withdrawing from the Joint Comprehensive Plan of Action (JCPOA) and reimposing sanctions on Tehran in 2018, India's ONGC Videsh had been vying for a contract to develop Farzad-B, which it discovered in 2008.

An Indian consortium led by ONGC proposed an $11bn development plan for the field in 2017 that would have involved the construction of a liquefaction terminal to export LNG to India. But Iran and its Indian partners struggled to agree on a price for gas from the field. Gazprom also signed an initial deal to develop the field in 2017.

The award to Petropars suggests Tehran now wants to go ahead with the project on its own, even though the US is expected to rejoin the JCPOA and ease sanctions under president Joe Biden.

"The award of the Farzad-B contract to Petropars serves as a reminder that while there is confidence about the US’ return to the JCPOA, IOCs are likely to remain hesitant," Ian Simm, principal advisor at IGM Energy, tells NGW. "The ONGC Videsh-led consortium discovered the field under a contract that expired in 2009 and they had been in pole position to resume activities; however, as has been the case across several fields in Iran, Tehran wasn’t prepared to wait any longer."

Even so, Simm notes that the short five-year duration of the Petropars contract "presents an opportunity to reintroduce foreign partners in the medium term, at which point, the field may be shifted to the integrated petroleum contract model rather than buyback, as had been discussed previously."

The contract covers the development of eight production wells and two main and one secondary wellhead platform, along with liquid separation facilities at one of the main platforms and pipelines linking the onshore and offshore facilities.