Iran Rejects CNPC’s Request on SP11
Iran has rejected China National Petroleum Corporation’s (CNPC) request for a two-year suspension of South Pars phase 11 (SP11) development, the country's oil minister Bijan Zanganeh announced July 7. He did not say what prompted CNPC's request but US sanctions on Iran and its refusal to grant Chinese firms waivers, have led to delays in payments in cash, and oil transfers instead.
After US sanctions on Iran forced out French Total, its 50.1% stake was transferred to CNPC and the Chinese company then became operator and had to develop the $5bn project. “However, recently CNPC asked Iran to suspend developing the project for two years. We rejected the request,” Zanganeh said on local TV.
CNPC held a 30% share in the SP11 project as part of its 2017 agreement, but it now has 80.1%. The remaining 19.9% stake belongs to PetroPars, a subsidiary of Iranian state producer NIOC.
CNPC was expected to invest $4bn in the project, of which two fifths is to be paid before 2020 to enable the production of 56mn m3/d (20.4bn m3/yr) gas and 80,000 b/d condensate. The rest of its expenditure will be used to maintain production levels as the field peaks in 2023.
Shareholders have spent around €90mn, of which half was invested by Total, 30% by CNPC and the rest by PetroPars during last two years.
The second phase of the development of SP11 requires a 20,000-metric ton platform with two or three compressors to be in place by 2022, the year before the expected pressure drop; however, neither Iran nor CNPC are believed to have any previous experience in this specific area and expected costs are in excess of $2.5bn.
Zanganeh also said that this fiscal year, starting March 21, South Pars production would go up by 80mn m3/d , as he also said last year. But according to official oil ministry statistics, obtained by NGW in June, commercial sales gas volumes from South Pars went up just 12.5% (or 55mn m3/yr) to 495.2mn m3/d, while overall, national output rose just 7.4%.
BP’s 2019 Statistical Review of World Energy has put the country’s total sale gas production at 656.2mn m3/d (239.5bn m3/yr) for 2018, about 8.8% more than 2017.