Page 4 - MEOG Week 33

MEOG Commentary MEOG
Chinese firms still
in talks to develop
Iranian fields
Development has stalled at Phase 11 of the South Pars gas eld and the Yadavaran oil eld, but Chinese companies are still in discussions about resolving the current impasse
Iran
What:
CNPC and Sinopec have been under pressure
to ramp up output at
the assets, with Tehran having threatened to tear up their contracts.
Why:
South Pars Phase 11 was set for development when sanctions were lifted, but CNPC has dragged its feet since french super-major Total pulled out.
What next:
Sanctions remain a threat to both Chinese rms’ involvement, but the ongoing trade war with the US may yet in uence the way this plays out.
DISCuSSIoNS about the development of Phase 11 of the South Pars (SP11) gas field remain ongoing between Iran and China National Petro- leum Corp. (CNPC), according to o cial state media. Meanwhile, Sinopec is in talks regarding the second phase of the Yadavaran oil eld.
South Pars is Iran’s biggest gas eld and forms part of the world’s single largest gas deposit, which it shares with Qatar, while Yadavaran is one of the world’s largest under-developed oil- elds, with estimates suggesting that it holds in excess of 30bn barrels.
CnPC and south Pars
e SP11 news follows e orts in July by Iranian oil Minister Bijan Zangeneh to clarify CNPC’s intentions regarding the project in which the Chinese rm owns a stake of 80.1%. e remain- ing share is held by National Iranian oil Co. (NIoC) subsidiary Petropars.
Zangeneh said at the time that a request from CNPC to suspend operations on the project had been rejected, with the Chinese company reti- cent to carry out development work amid the threat of sanctions from the uS.
He said that if CNPC did not intend to
proceed with SP11 in a timely fashion, then it would have to “pull out of the contract, which if so, its share would be transferred to Iran’s Petropars”.
However, Mohammad Meshkinfam, the CEo of the Pars oil and Gas Co. (PoGC) told oil and gas sector media outlet Shana last week that his rm was still in talks with CNPC. PoGC is in charge of the overall management of the South Pars eld.
CNPC negotiated a 30% stake in the $4.879bn project in July 2017, with French super-major Total taking operatorship of the project and a 50.1% stake, and Petropars holding 19.9% under the integrated petroleum contract (IPC) model. SP11’s production target was set at the time at 20.8bn cubic metres per year.
China’s eventual level of commitment to investing in South Pars Phase 11 and other pro- jects in Iran, as well as to buying Iranian crude oil, may depend on how its trade war talks with the uS evolve, with Beijing’s policy on Iran pos- sibly becoming a bargaining chip in the negotia- tions with Washington.
Iran has around 34tn cubic metres of proven natural gas reserves, with the supergiant South
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w w w . N E W S B A S E . c o m Week 33 20•August•2019