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    Iran Hit by Sanctions: Zanganeh


The petroleum minister has some expected bad news about the country's upstream gas sector.

by: Dalga Khatinoglu

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Iran Hit by Sanctions: Zanganeh

Iran’s oil minister Bijan Namdar Zanganeh has said US sanctions have decelerated Iran’s gas projects and put some projects in doubt. Iran should have completed all the South Pars phases – except phase 11 and 14 – by March 2019 but those have slipped 12 months, he told national television late August 28. Iran has spent about $80bn on the field, which is shared with Qatar, over the last 20 years, and needs a further $30bn-40bn to both complete that and to prevent pressure fall, expected to occur in 2023.

During a live programme on TV, Zanganeh said South Pars would produce some 800mn m3/d by next March.

Five phases are under development and mostly finished, but each phase needs $5-6bn investment, while according to this year's budget the National Iranian Oil Co has $8.76bn to spend on all its oil and gas projects. But that is without paying off its $50bn debts. Last year, Zanganeh said South Pars was swallowing up 90% of the country's upstream investments.

The budget was calculated assuming crude exports at 1.5mn b/d, while the country’s total exports to its only client China were 233,300 b/d in May-July, according to China custom administration.

US stopped waivers for Iran’s oil clients on May 2, 2019, but CNPC and Sinopec are receiving Iranian oil as repayment for their investment and development of Iran’s Yadavaran and Azadegan oil fields.

Phase 14 is less than 60% complete, while the development of phase 11 is unclear as French Total left the project in 2018, following sanctions and China is not yet ready to take on Total's burden.

The field would reach dew-point in 2023 and the country would lose 40% of its production, unless it can install 20,000-metric ton platforms with several compressors to prevent the pressure fall.

Other gas projects

Iran has also other major upstream gas projects that sanctions have hit. The country lost the opportunity to develop the Kish gas field with Russian giant Gazprom after the US withdrew from the nuclear deal on May 2018 and re-imposed sanctions on Tehran.

According to an official document, seen by NGW, the 28.3mn m3/d project has had several different contractors as of now and the future of the project is unclear. Zanganeh also said India had not yet confirmed it would invest in the Farzad B gas project. But in April Zanganeh said that Iran and India had settled their outstanding differences.

Farzad B which has 540bn m³ reserves was discovered by a consortium of OVL, Indian Oil Corporation and Oil India. Iran and India have been discussing the development plans for the field for last few years.

According to official statistics, National Iranian Gas Co injected 652.6mn m3/d into the grid in the last fiscal year, ended March 20, about 7.4% more than the previous year.

BP’s 2019 Statistical Review of World Energy estimated Iran’s sale gas production at 656mn m3/d in 2018, about 8.8% more than 2017.