Which stage are talks with CNPCI in now for SP11 development?
Negotiations with this company are under way according to the provisions of the agreement. National Iranian Oil Company (NIOC) and CNPCI are trying to abide by the terms of the contract. God willing, we will let you know about the decision made on this phase. Since the talks are not finalized yet I cannot provide you more details.
Is Petropars technically and financially able to handle this $4.8 billion project in case CNPCI does not get involved in the project?
Yes! Petropars was present in the SP11 development project from the very beginning and is aware of all processes. Petropars is the right choice for SP11 and is ready to start developing this phase as soon as possible. If any other company steps in for developing this phase, it will take time and a new agreement will be needed with the new company. Petropars has been through this procedure and is now ready for operation. Regarding the ability to financing the project, I have to say that in the first step, full financing is not needed and we can start with a small sum. For instance, there is now sufficient budget for drilling and Petropars can start drilling. The only thing to settle would be the contractual issues with Petropars.
You mentioned that Petropars would be able to start SP11 development in the shortest possible time. So why wasn’tthe project awarded to Petropars before signing the deal with France’s Total and China’s CNPCI?
The response to your question is very simple.SP11 is prone to production falloff due to its geographical location which allows both Iran and Qatar to recover gas. We had predicted this block to face pressure falloff within a year and a half (less than one year ago). Therefore, we had planned to install a compressor platform for these two blocks. Petropars has no experience of building compressors and we decided to benefit from Total’s international experience and technical savvy for building and installing the compressor platform. That would have allowed us to develop a model for other South Pars phases in addition to using the compressors in this block. We wanted to kill two birds with one stone.
I reiterate that gas production from the jointly owned South Pars gas field is on the decline and we have to think about preserving output in other blocks. So far, recovery from the blocks has been under way traditionally, creating too much expectation. Currently, South Pars accounts for 80% of Iran’s gas production. But we need to note that this 80% will not be permanent. If we have reached the output peak in South Pars, we will also see an annual decline in output. Therefore, we have to find ways to keep production stable. This initiative was shown by PetroleumMinistry in signing the SP11 deal.
Last but not least, the platforms currently installed in South Pars weigh 2,500 tonnes while compressor platforms weigh 20,000 tonnes, i.e. eight times heavier. Currently, the infrastructure needed for these platforms does not exist in ISOCO, SADRA, IOEC and SAFF yards. These companies have not yet built platforms of this size; therefore, we intended to use Total’s technical knowhow in building this platform. In the agreement we had insisted on the domestic manufacturing of the compressor platform. The agreement had been drafted so that Total would do the job in Iran along with transferring technical knowhow to the country. Total had also presented its own plan for strengthening the infrastructure in IOEC and SADRA yards. Along with building a compressor platform for SP11, we intended to upgrade the IOEC and SADRA installations and create conditions for the domestic manufacturing of compressors in other South Pars phases. But due to certain developments it did not materialize.
What has happened since 2017 to make you believe that Petropars can handle this project?
Petropars is not supposed to build any compressor platform. The company will develop SP11 like other projects it has already handled, and will carry gas onshore. Pressure falloff and compressor platform issues will be handled later on.
What are your plans for compressor platform?
We have a fundamental project under way now, which was presented by a French company before the sanctions were re-imposed. We expect this plan to make basic design in partnership with a domestic company or a foreign company in order to implement a model for all South Pars phases.
Did the French company do basic design in parallel with Total?
Yes!
What has to be done then?
A variety of options are envisaged. For instance, a compressor is installed exclusively on each platform. We have 38 wellhead platforms which would impose heavy costs. Another option which we (POGC) proposed to consultants and which has been endorsed was that the compressors be installed where pipes branch out and meet. We predict to have three offshore compressors. In other words, each hub will be linked with 10 to 12 platforms.
How much do you estimate this project to cost?
We estimate at about $20 billion.
Are domestic companies able to handle this project?
The technology for building compressor platforms does to exist in Iran, even not in the Middle East. Based on studies conducted prior to signature of the SP11 deal with Total, only three such platforms had been built across the world, one of which by Total. That is why we chose Total for the project.
What did Total do for the SP11 project since the deal was signed in 2017 until it pulled out in 2018?
Fundamental studies and pressure booster studies were carried out. A tender bid was held for choosing contractor for the jackets, drilling and pipes. The successful bidder was chosen. Everything was ready to be assigned to contractors, but we were hit by sanctions. Total spent $100 million totally.
Has pressure fall-off happened in South Pars? How much is that?
It has stared, but it stands low. The figure is expected to be significant in four to five years. Our annual pressure fall-off will equal one phase (28 mcm).
To what extent has the compressor platform voided pressure fall-off?
Let me provideyou withan example. The wellhead pressure is conventionally 120 Bar for the transfer of 1bcf of gas onshore. If this 120 Bar is cut to 100 Bar, we can no longer carry 1 bcf of gas onshore. If this figure is cut to 90 Bar, we can carry 700 mcf onshore.As long as the wellhead pressure falls off, production will decline too. That is why we need a compressor platform. By installing these platforms, production fall will be contained. Now without such platforms we have to witness pressure fall off and decline in production.
Do we have any compressors to stop production fall-off?
There are currently a number of compressors for light and sweet gas. But there is not compressor for offshore gas which has such problems as sourness and humidity. If companies like [power utility] MAPNA and Oil Turbocompressor (OTC) can make a compressor to meet our needs, that would be of great help. Of course, space limits constitute another problem in offshore activity. Therefore, both the volume and weight need to be taken into consideration in building compressors to be installable in the envisaged platform.
Is POGC able to preserve the production?
Yes, it is. Some activities like acid job of South Pars wells has started. We finished acid job for 10 to 11 wells and started production from SDP5 and perforated the K1 layer. Therefore, the pressure fall-off is delayed for two years. We are making efforts to avoid a pressure fall-off, as long as we have not mastered the technology for compressor platform.
Will there any gas supply problem in the future as the annual pressure fall-off at South Pars continue?
The point is that South Pars is not the only gas field. There are also North Pars, Golshan, Ferdowsi, Kish and other gas fields. The Ministry of Petroleum will not neglect its obligations. The South Pars development was our priority because of its shared status. Naturally after finishing with the South Pars development, we will follow up on the development of other gas fields.
How much is the value of products of each South Pars phase?
With gas price at 10 cents per cubic meterand condensate price at $50 a barrel, it will add up to $5 million a day. In other words, the value of production from 26 South Pars phases currently operational, stands at $130 million.
What happened to talks with the Indians for the development of Farzad B gas field?
We’ve had correspondence with them, but they are yet to announce their final view. In parallel with correspondence with the Indians, talks have been under way with Petropars.
Do you mean that the Indians are no longer in this project?
Doors are open and the Indians can think about it.
What about the South Pars oil layer development?
For the development of the oil layer, a consortium of domestic and foreign companies referred to us. Negotiations with them are under way seriously, and you will soon learn about the happy outcome.
At what stage are talks for the development of Balal field?
The contract for the development of this field is ready to be signed. As soon as NIOC expresses its readiness, the contract will be signed. This contract for this field is expected to be signed by domestic companies.
What is Qatar’s recovery rate from this joint field now?
It is recovering about 600 mcm/d, while Iran’s recovery rate is about 630 mcm/d.
How has South Pars empowered Iranian contractors?
The fact is that South Pars has been instrumental in upgrading domestic industry, project management mechanism, development of contracting system and developing engineering service companies and this role is still continuing. It is a great honor for us to see Iranian contractors show off in South Pars,the contractors who were trained in South Pars and matured. These companies are like assets for the country. God willing, their activities will expand day by day to implement bigger projects inside and outside the country.
How do you compare South Pars in 2013 and now?
Gas recovery from South Pars has reached 630 mcm/d now, while it was 285 mcm/d in 2013. In 2013, there were 11 platforms in the phase of production, but now there are 32 platforms. 20 refinery trains were operationalin 2013, now there are 50 of them, i.e. 30 trains have been added in six years. Comparative data in the offshore pipe-laying and well drilling is eye-catching.