Iran Plans to Hold Tender for South Pars Ph 11 Subcontracts

In the first major energy deal between Iran and a western company since last year’s lifting of nuclear sanctions, Total S.A. signed an agreement in July to develop Phase 11 of South Pars, the world’s largest gas deposit shared between Iran and Qatar.

But most of the works for Phase 11, which sees Total as the project leader and China’s CNPC and Iran’s Petropars as minority stakeholders, are planned to be subcontracted through tenders.

“All subcontracts [for SP Phase 11] are planned to be awarded by the end of the year and operational works are set to begin early next year,” Rasoul Fallahnejad, deputy for engineering and construction management at state-owned Pars Oil and Gas Company, said on Thursday, IRNA reported.  

He made the statements in a conference on briefing domestic companies about opportunities in SP Phase 11 venture in Tehran wherein the representatives of Total were present.

"Documents pertaining to the tender process for Phase 11 projects have been sent to subcontractors and some tenders are being finalized," he said.

The Phase 11 project will be developed in two phases. The first phase, at an estimated cost of $2 billion, will consist of 30 wells and two wellhead platforms connected to existing onshore treatment facilities by two subsea pipelines, a statement on Total's website reads.

At a later stage, a second investment phase, involving the construction of offshore compression facilities, will be launched when the reservoir conditions demand it.

Reza Dehqan, a deputy for upstream affairs of the National Iranian Oil Company, also said domestic firms that look to secure a place in SP Phase 11 project will be classified as engineering, procurement and construction companies, general contractors or oil services companies.

  Offshore Platform

Officials are ironing out details for a tender to build a 20,000-ton offshore platform that will be used to produce 56 million cubic meters per day of natural gas from Phase 11.

The platform, which will be one of the largest SP Phase 11 subcontracts, has been described as "unrivaled in the region" by Oil Minister Bijan Namdar Zanganeh. The largest offshore gas platform in South Pars weighs about 3,000 tons.

The world's fourth-largest oil and gas firm was previously active in phases 2 and 3 of South Pars, but it ceased operations in Iran in 2010 following disagreements over contract terms as well as pressure from the French and US governments over oil and trade sanctions against Tehran.

"Total doesn’t build jackets or topsides, doesn’t drill wells and doesn’t manufacture equipment or pipelines. All these tasks will be put out to tender and Iranian companies can participate in these tenders," Zanganeh was quoted as saying by Shana in July.

Iran has drawn over 1 trillion cubic meters of gas from South Pars since the first of its 24 planned phases came on stream in 2002.

The country is now producing around 880 million cubic meters of gas daily, two-thirds of which come from South Pars.