The National Iranian Oil Company (NIOC) has revealed that the country has around US$50 billion in oil and gas and related projects now underway, with more to come. Given the precarious state of Iran’s economy, it is unsurprising to find that much of this has been pledged by its two major sponsors, China and Russia. More surprising, though – even with the resumption of relationship deal made on 10 March and related developments – is that Iran is expecting billions of dollars to come from its erstwhile arch-enemy Saudi Arabia. Moreover, this support for Iran’s core oil and gas industry from its long-time nemesis is also set to be expanded across several areas of mutual interest to the two countries, all under the watchful eye of Beijing and Moscow.
As examined recently by OilPrice.com, around US$20 billion of this will go to completing the development of the supergiant South Pars natural gas field – one half of the biggest gas field in the world. The South Pars site stretches across 3,700 square kilometres and holds an estimated 14.2 trillion cubic metres (tcm) of gas reserves in place plus 18 billion barrels of gas condensate. It already accounts for around 40 percent of Iran’s total estimated 33.8 tcm of gas reserves (mostly located in the southern Fars, Bushehr, and Hormozgan regions) and about 80 percent of its gas production.
Around US$2.4 billion of this will go to finishing the often-delayed and highly controversial Phase 11, which for a long time has been a focal point for proxy hostilities between West and East. Around another US$1.6 billion will go on completing other phases, and in drilling 35 new wells across it. An additional US$15 billion will be spent on launching gas compressor stations at various points across all phases of the South Pars site. The remaining US$1 billion will be spent on the first part of expanding Iran’s liquefied natural gas (LNG) capabilities, as becoming a world-leading exporter of LNG has long been a core objective of Iran. This has already been achieved by neighbouring Qatar using its 6,000 square kilometre North Field (or ‘North Dome’) part of the supergiant gas reservoir.
In line with boosting its nascent LNG sector, and its natural gas output up to at least 1.5 billion cubic metres per day (bcm/d) from the current 1 bcm/d or so by 2029, Iran is set to spend another US$3.2 billion on developing several other of its gas sites, including Kish, Balal, and Farzad B. Russia will be taking the lead in all these gas projects, according to a senior source in the European Union’s (E.U.) energy security complex spoken to exclusively by OilPrice.com last week.
“Before the U.S. withdrew from the JCPOA [Joint Comprehensive Plan of Action, colloquially ‘the nuclear deal’] in [May] 2018, Russia had multiple major MoUs [memorandums of understanding] signed for seven big oil and gas fields in Iran – the most of any country,” he highlighted. These were by GazpromNeft for the Changouleh and Cheshmeh-Khosh oilfields, Zarubezhneft for the Aban and Paydar Gharb fields, Tatneft for the Dehloran field, and Lukoil for the Ab Teymour and Mansouri oil fields.