Page 5 - MEOG Week 41 2021

MEOG COMMENTARY MEOG

has been in the works since 2016. cubic metre per day total.
The agreement was signed between Iranian Tehran is aiming to expand output from
Foreign Minister Mohammad Javad Zarif and South Pars to 1 bcm per day as quickly as possi-
China’s Foreign Minister Wang Yi, with Iranian ble but requires significant investment to main-
President Hassan Rouhani thanking the Chi- tain and add to production.
nese delegation for standing up to “American Owji said last week that the MoP is carrying
unilateralism”. out studies to increase pressure at various phases
Ali Larijani, former speaker of the Iranian of South Pars. “Due to the drop in gas pressure
parliament and potential presidential candidate, in the field, we estimate that over the next six to
was instrumental to the deal and represented eight years, we will have to invest about $22bn to
Supreme Leader Ali Hosseini Khamenei in maintain gas production,” he added.
discussions. This largely aligns with previous plans
Ahead of the signing, Larijani said that Iran announced to install 20 heavy compression plat-
would not be influenced by temporary external forms to maintain production levels at a cost of
factors. “The Islamic Republic of Iran decides around $1bn each.
independently about its relationship with coun- In September, NIOC subsidiary Pars Oil and
tries and it [will] not, like certain countries, Gas Co. (POGC) announced that it was prepar-
change its position with a telephone call,” he said. ing to kick off a drilling campaign to appraise
Meanwhile, Wang noted that “China’s rela- possible new reserves in the northern area of
tionship with Iran will not be affected by con- South Pars.
ditions of the day and it will be permanent and At the time, the company said it had carried
strategic.” out preparatory work for the drilling of a new
Despite the recent change of administration, appraisal well by the end of the month, but it has
Iranian officials will remember the previous not yet provided an update on progress.
government’s dissatisfaction with the lack of pro- POGC holds ultimate responsibility for the
gress made on key assets by Chinese companies projects, with fellow NIOC subsidiary Petropars
that showed even they were not beyond the reach carrying out jobs on the surface and subsurface.
of US-led sanctions. The country is home to around 34 trillion
After years of trying to convince the world’s cubic metres of proven natural gas reserves, with
best-reputed IOCs to return, Tehran appears the supergiant South Pars accounting for around
to be left with little choice but to allow Chinese 14 tcm as well as 18bn barrels of gas condensates.
firms access across the board. The Islamic Republic holds a 3,700-square
km portion of the 9,700-square km deposit that
Gas it shares with Qatar, where it is known as the
For gas, investment will focus mainly on main- North Dome field. Around 80% of the field’s ini-
taining production levels rather than expansion, tial gas reserves are believed to remain in place.
with a significant drop in reservoir pressure With oil and gas apparently competing for a
anticipated over the next six to eight years at the limited budget, given Iran’s high reliance on the
country’s key asset. latter for electricity and fuel generation, there is
In August the National Iranian Oil Co. certainly an argument that maintaining reser-
(NIOC) and its subsidiaries inaugurated the voir pressure should be prioritised.
remaining offshore projects of the overall South However, valuable oil exports would pro-
Pars development, which includes 37 platforms vide welcome respite for the country’s econ-
across the field’s 24 phases to produce 700mn omy, though this will depend on negotiations in
cubic metres per day at present of Iran’s 1bn Vienna.™

Week 41 13•October•2021 www. NEWSBASE .com P5