Foriegn oil firms can play limited role in south Pars development

Iranian Oil Minister Bijan Namdar Zanganeh underlined his ministry's determination to develop the remaining phases of the giant South Pars oil and gas filed, and said that the foreign companies can practice limited partnership in the development of the project. "The foreign companies applying for partnership in Iran's South Pars projects will be used in only the two remaining phases and they will play no role in the country's under construction phases," Zanganeh told reporters on Tuesday. He pointed to the upcoming visit of Pakistani President Mohammad Nawaz Sharif to Iran, and said, "We want the Pakistanis to fulfill their commitments concerning gas contracts (with Iran)." Zanganeh said the country has ceased cooperation with those Chinese companies that have failed to comply with their contract terms, but meantime stressed that this should not be seen as an oil ministry effort to put Chinese firms aside. Asked about the presence of a Chinese company in the development of the North Azadegan oilfield project, the Iranian oil minister said, "This company is still active in Azadegan project, but  we are not satisfied with its performance." Zanganeh noted that concurrent with domestic exploration activities, his ministry is compiling new contracts to pave the way for the presence of foreign exploration companies and investors. Last week, China National Petroleum Corporation International (CNPCI) was expelled from Iran after it failed to comply with its undertakings for raising the production of Azadegan gas field. A decree expelling the CNPCI came into force last Tuesday evening by Namdar Zanganeh after the firm was repeatedly warned to face a prospect of expropriation for procrastination in meeting its promises in the South Azadegan gas field which the country shares with Iraq. Managing Director of the National Iranian Oil Company (NIOC) Roknoddin Javadi announced on Tuesday Iran's firm decision to expel the Chinese firm, adding Iran had repeatedly warned the CNPCI officially of expulsion. On Monday, a former senior oil official said the Iranian contractors who have taken the responsibility for developing the giant South Pars gas field have proved better than their giant foreign rivals, including France's Total and Royal Dutch Shell. "The (Iranian contractors') progress in the development of the new South Pars phases is surprising compared to the performance of the giant foreign oil firms," the official, who asked to remain unnamed, told FNA on Monday. "Given the achievement of such progress by Iranian contractors and the manufacture of products and equipment by Iranian industrialists, waiting for (French oil and gas company) Total and (Royal Dutch) Shell is no way helpful to the country," he added. The South Pars gas field, divided into 28 phases, is located in the Persian Gulf on the common border between Iran and Qatar. The field is estimated to hold 14 trillion cubic meters of gas as well as 18 billion barrels of condensates. The field covers an area of 9,700 square kilometers, 3,700 square kilometers of which lie in Iran's territorial waters in the Persian Gulf. The remaining 6,000 square kilometers, better known as the North Dome, are located in Qatar's territorial waters. Late in April, Iranian President Hassan Rouhani announced that all phases of the development of the giant South Pars gas field will be accomplished by the end of his tenure in 2017. "This year, four phases of the South Pars will be launched and 100mln cubic meters of gas output will be added to the country's capacity," President Rouhani said in a live televised interview. Noting that four phases of the South Pars will go on stream next year, he said, "We plan to launch all South Pars phases during my administration." Rouhani further praised the endeavor of Iranian experts, specially those in the oil ministry, and said, "Highly good moves have been made in the field of oil and gas." Also in March, the managing-director of Dana Energy Group said Iranian contractors and manufacturers must be hired in the development of oil and gas fields. Mostafa Khoyee said employing Iranian entities will be instrumental in enabling the private sector to operate oil projects. He also said that success in the oil and gas development projects in Iran depend on the implementation of risk and reward policy in the projects, integration of contracts and using the state-of-the-art technology. Khoyee stressed the need for closer cooperation between contractor and outsourcer in the oil and gas projects for the acceleration of work. He said Iranian companies have fared well in geology, drilling and drilling services in recent years, adding that North Yaran, Azar and Changouleh are being developed by Iranian companies.