Iran Explains Total's South Pars Remuneration
Iran’s oil minister Bijan Namdar Zangabeh said that some $84bn worth of revenue will come in from South Pars phase 11 over 20 years, based on expected $50/barrel oil price.
“About 15%, or $12bn of the mentioned figure would be paid to French Total-led consortium,” he told journalists in Tehran on July 5.
Total (with a 50.1% stake), Chinese CNPC (30%) and local company Petro Pars (19.9% stake) signed a 20-year agreement with state National Iranian Oil Company on July 3 to develop South Pars gas field’s 11th phase (SP11). The agreement is based on the newly-designed contract model, called Iran Petroleum Contract (IPC), that allows foreign firms to take a percentage of produced hydrocarbons for 20-25 years as return of investment and profit.
Based on official statistics, it is expected some 335bn m3 gas, 290 million barrels gas condensate, 14mn metric tons of propane and butane, 12mn mt ethane as well as 2mn mt sulphur would be produced from SP11 over a 20-year period.
According to the agreement, the first stage of SP11 ($2bn worth), would become operational in 40 months -- including construction of two 1,500-ton platforms, drilling 30 wells and construction of 270-km pipeline -- to produce 56mn m3/d (20.5bn m3/yr) of gas and 80,000 b/d of gas condensate.
At the second stage worth $2.8bn, the consortium would launch a 20,000-ton platform with mega compressors in 60 months, to maintain the production level in the phase, as the field is expected to reach dew point and lose productivity in 2023.
Coming to possible US sanctions’ impact on the project, Zanganeh said that in case the partners abandon the project incomplete, Iran would pay them gradually only after completion of the project.
Zanganeh said that, if the agreement is to be extended for further five years, then the revenues of consortium would increase as well.
Iran desk