Iran announced on Tuesday it has plans in place to increase gas production from the giant offshore South Pars field to 800 million cubic meters a day by 2016, the official IRNA news agency reported.
The development will be higher than Qatar’s output of 550 million-560 million cu m/d from the shared field, the report added.
“Before the end of the fifth five-year development plan (in March 2016), gas production from the South Pars gas field will reach 800 million cubic meters a day and this is higher than Qatar’s production from this shared field,” IRNA quoted Mousa Souri, managing director of the Pars Oil and Gas Company, as saying.
Iran has the second biggest natural gas reserves after Russia. Development on the Iranian side of the shared gas field is far behind Qatari side due to US-led sanctions.
Qatar is the world’s largest LNG exporter with current capacity to produce 77 million mt/year after rapid development of the North Field, which contains 900 Tcf of natural gas reserves.
The shared field contains the world’s largest non-associated gas reserves. Iran is keen on matching the fast pace of development on the Qatari side as it fears quick extraction will result in the depletion of reservoirs adjacent to the North Field.
The Iranian development of the remaining phases of South Pars has been split into 28 separate phases due to its sheer size. Several of the uncompleted phases are running several years behind schedule following the withdrawal of foreign oil and gas companies due to international sanctions on Iran. South Pars contains roughly half of total Iranian gas reserves, estimated at 1,045 Tcf at end 2010 by BP’s Statistical Review of World Energy.
“At the moment, 10 operational phases in the Assaluyeh region [on the Persian Gulf] are exploiting 254 million cubic meters of gas on a daily basis,” Souri said, adding that Qatar’s production stands at 550 million-560 million cu m/d.
Iran’s total gas production currently stands at 650 million cu m/d, nearly all of which is used domestically, with Turkey the main export market for pipeline gas from Iran.
Tehran is heavily relying on its own financial and technological resources to develop South Pars after foreign investment dried up. Finance for the multi-billion dollar projects is being sourced from bank loans, oil income and the sale of bonds domestically.
“In the first five months of the current year, $5 billion has been secured for these phases and $2 billion is being finalized,” Mohsen Khojasteh Mehr, deputy oil minister for planning, said. There are five months left to the end of the Iranian year.
The field requires around $20 billion each year to reach its targets, the Iranian official disclosed.
Iran ended plans for two LNG projects that it had previously negotiated with consortiums led by Shell and Total, which withdrew because of sanctions and poor economics. The exit of the multinationals from South Pars and other upstream oil and gas projects prompted Tehran to call in Chinese state-owned companies to fill the gap but Iranian officials have expressed frustration with the slow pace of movement by Chinese companies on two major oil projects and gas developments.