South Pars
CO2 Emissions
The Iranian South Pars Field is an extension of Qatar's giant North Dome Field. The Iranian South Pars holds an estimated 500 trillion cubic feet of in-place gas reserve, of which 360 trillion cubic feet are estimated to be recoverable. In addition, the Iranian section is estimated to hold 18 billion barrels of condensate in place, of which 9 billion barrels are recoverable.[1] Assuming .43 metric tonnes of CO2 per barrel of oil or natural gas liquids and 0.055 metric tonnes of CO2 per thousand cubic feet of natural gas, the amount of carbon dioxide that would be released through the combustion of the natural gas and natural gas liquids in the field is approximately 19.8 billion tonnes in the form of gas, and 7.74 billion tonnes in the form of natural gas liquids.[2]
Strategic Significance
The most significant energy development project in Iran, the South Pars field, accounted for about 55% of Iran’s natural gas production in 2016 and holds almost 40% of Iran’s total proved natural gas reserves.[3] However lack of foreign investment and insufficient financing, stemming from international sanctions, have slowed the development of South Pars.[4] At the end of 2015, however, Iran began inviting foreign companies to participate in all aspects of upstream projects.[5]
Companies Involved
Total operates the project with a 50.1% stake, is partnered by China's CNPC (30%) and Iran's Petropars (19.9%).[6] In May 2018 Total halted plans to help develop South Pars gas field as it seeks to clarify whether the investment can avoid falling foul of returning US sanctions on Tehran. Total was the furthest advanced of its European oil major peers in exploring upstream opportunities in Iran since the easing of international sanctions at the start of 2016. Oil companies have been forced to reassess their investment plans in the OPEC producer, however, in the wake of the May 2018 move by the US to pull out of the international nuclear deal with Iran and re-impose sanctions on the country.[7]
In June 2018 the Iranian government claimed that it was in talks with Gazprom to take over development of South Pars from Total, and that if Total walks away, Chinese state-owned energy major CNPC, which already holds a 30 percent stake in the field, might also take over. If both leave, PetroPars, a subsidiary of the National Iranian Oil Company, is prepared to step in.[8]
Potential ESG Risks
Corruption
With the re-imposition of U.S. economic sanctions in May 2018, the potential for Gazprom to fill the void left by western companies is notable in light of questions about Russian interference in the U.S. elections of 2016 and 2018 and allegations of collusion between Russia and the Trump campaign.
Status of Project
Since the implementation of Iran's new Integrated Petroleum Contract in 2016, two contracts to develop South Pars with foreign companies have been signed. The first one was the July 2017 agreement with French major Total and China National Petroleum Corporation (CNPC) to develop Phase 11 of the South Pars field. The development will not produce any crude oil but is expected to produce about 80,000 b/d of condensate. More recently, Russian state-controlled Zarubezhneft signed oil development contracts under the IPC, with reportedly Rosneft, Lukoil, Gazprom Neft, and Tatneft all considering upstream agreements with Iran. The latest agreement was signed in mid-March 2018 between Zarubezhneft, NIOC, and Dana Energy to develop West Paydar and Abadan onshore fields near Iraq. The ten-year contract calls for improved recovery rates and increased production from the fields to 48,000 b/d.[9]
Project Economics
Iran has traditionally provided gas to its own population at highly subsidized prices, leading to overconsumption.[10]
International Dynamics
After decades of sanctions and conflicts with the U.S. and European countries and financiers, Iran needs massive investments and transfer of technology to begin to realize the country’s economic potential. With the U.S. reimposing sanction in May 2018, Iran is trying to further engage CNOC, which already holds a 30% stake in South Pars, and Gazprom to develop the field.[11]
Financing
US banks are involved in more than 90% of Total's financing operations, Total has said, adding that US assets represent more than $10 billion of capital employed and that 30% of its shareholders are in the US.[7]
Articles and resources
References
- ↑ "IRAN - The Geology, APS Review Gas Market Trends, April 2, 2007, cited in "South Pars/North Dome Gas-Condensate field," Wikipedia, at http://bit.ly/2OfdAkr, accessed September 2018
- ↑ "US EPA Greenhouse gas equivalencies," U.S. EPA, accessed September 2018
- ↑ Iran, EIA, Apr. 9, 2018
- ↑ Iran’s petroleum production expected to increase as sanctions are lifted, EIA, Jan. 19, 2016
- ↑ "Iran invites foreign firms to take oil from South Pars," Offshore Energy Today, accessed September 2018
- ↑ Total waits on CNPC to decide on Iran's South Pars natural gas field stake, S&P Platts Global, Aug. 13, 2018
- ↑ 7.0 7.1 Total halts Iran's South Pars gas project over US sanctions risk, S&P Global Platts, May 16, 2018
- ↑ Iran says South Pars not affected by U.S. actions, upgrading oilfields, Reuters, Jun. 19, 2018
- ↑ Iran Overview, EIA, Apr. 9, 2018
- ↑ Is Qatar plundering Iran's share in the South Pars joint gas field?, Payvand, Jun. 19, 2014
- ↑ Can European business and technology save the Iran deal?, AL-Monitor, Mar. 19, 2018
