Iran Blames US Sanctions Threat for Kish Delays
The threat of US sanctions on Iran has led to the suspension of the Kish project, Iran’s biggest gas field after South Pars, according to an Iranian company executive. “The project needs equipment from Canada and Singapore,” the acting head of the national Iranian drilling company (NIDC) Mohammad-Reza Takaydi announced June 7. Without going into details, he said that “Iran is unable to manufacture them domestically and there is no option but to import them from abroad.”
According to official documents obtained by NGW, there should by now be 14 wells drilled for the first phase. But the midstream sector, especially the laying of subsea pipelines is far behind the plan, while the there has been almost no work done on the processing unit for some years.
Despite its 1.55 trillion m³ of in-situ reserves and an expected 70% recovery rate, Kish has suffered long delays. The project started 11 years ago and its first phase is projected to produce 28mn m³/d gas with 12 parts per million sulphur content. That makes it half as sour as South Pars and not requiring special corrosion-proof equipment.
Iran has signed deals with Anglo-Dutch major Shell, Italian Eni and Russian Gazprom separately to study the field and receive their proposals to sign development contract, however, none of them has finalised the deal, while the US withdrawal from the nuclear deal on May 8 has made the situation more complicated.
According to documents, obtained by NGW, Iran has invested less than $300mn of the necessary $2.46bn in the up/mid/downstream sectors of phase 1 of the Kish field as of April 22. The overall invested volume is just $50mn more than March 2017.
Hamid Hosseini, co-founder of Iranian oil, gas and petrochemical products exporters union, who also serves as a Tehran chamber of commerce member told NGW that Iran could finish the first phase in future, but the later two phases have no timetable. Each phase would produce 28mn m³/d.
He said that poor management experience, technology and investment problems continue to challenge the country’s oil and gas sectors. This will worsen with the return of sanctions.