Monetary and Capital Market Exclusive, March 2004

Monetary and Capital Market in Iran

Petropars has developed partnerships and joint ventures with multinational companies from around the world. 

Beneath the clear waters of the Persian Gulf, at depths over 4000 meters, dwells a primordial repository of wealth, a mammoth non-associated gas field. Latest surveys indicate that this reservoir, believed to be the largest in the world, contains over 25 trillion cubic meters of natural gas plus more than 35 billion barrels of condensates and a considerable amount of crude oil. To get an idea about the size of this reservoir, it can satisfy global gas needs for over 10 years. Iran and the state of Qatar share this reservoir. In order to develop the Iranian side of the field, Pars Oil & Gas Company, a subsidiary of NIOC, divided it into 28 segments (Phases).

Currently Petropars is involved with Phases 1, 4 & 5, and 6, 7 & 8 from this reservoir. The total capital expenditure of these projects adds up to $5 billion. Managing these projects is a serious challenge for Petropars, a company almost as old as its projects. However, with a knowledgeable and skillful team, and fierce determination, Petropars is meeting these challenges as successfully as their well-established competitors.

During the course of managing these mega-projects, Petropars has developed partnerships and joint ventures with multinational companies from around the world. Combining strengths with their partners in a multicultural environment, Petropars is committed to meet the requirements of these projects at the international level, especially in the areas of HSE and Quality.

Company Background: Petropars was registered on January 1998, with its main focus on upstream oil and gas projects by relying on domestic capabilities. Petropars commenced the development of Phase 1 of the South Pars Gas Field in January 2000. In July of 2000 with the partnership of Eni of Italy Petropars was awarded the development of Phases 4 & 5.  Another mega-project the development of Phases 6, 7 & 8 was awarded to Petropars through an international competition process in mid-2000.

Iran’s Gas Reserves: Iran holds around 14.8% of the world’s natural gas reserves, being blessed with such colossal reserves, Iran has focused its attention on its gas industry in a bid to facilitate national economic development. Iran’s natural gas reserves equal 35.1 trillion cubic meters of gas.

South Pars Phase 1: In January 2000, the development of South Pars Gas Field Phase 1 was awarded to Petropars. Development of Phase 1 is currently in the stage of handover and consists of three main sections:

• Offshore structures and facilities for extraction of sour gas

• A 105 km submersible pipeline to transport sour gas to the refinery in Assaluyeh

• Onshore gas refinery for separating condensates and removing sulfur from sour gas and injecting sweet gas into the cross-country trunk line IGAT 

The pivotal and most important common factor among all of these projects is its Iranian essence.

Petropars emphasizes the following objectives:

• Knowledge sharing, especially in the field of project management

• Elevating Iranian production and technologies

• Successful completion of world-class projects upholding international standards 

• Reducing the cost of execution for fundamental projects

• Obtaining economic and technical self-sufficiency

• Maximizing domestic capabilities

Final Products

Phase 1 utilizes 12 wells that are drilled in an average depth of 3670 meters and are located 105 km offshore from Assaluyeh. Preliminary refining is done on the offshore facilities and then transported to Assaluyeh via a 32” sub-sea pipeline. Assaluyeh’s onshore facilities finalize refinement to produce:

• 25 million cubic meters (920 million cubic feet) of treated gas per day

• 40,000 barrels of stabilized condensates per day

• 200 tons of solid sulfur per day

South Pars Phases 4 & 5: In a joint venture Petropars and Eni of Italy won the bid to develop phases 4 & 5 of the South Pars Gas Field in 2000, and commenced their work in July of the same year. This project is currently progressing as planned and is expected to be completed by 2005. The present share breakdown is Eni (Agip) owning 60%, Petropars 20% and NICO 20%.

Phases 4 & 5 consist of three main sections:

 Offshore structures and facilities for extraction of sour gas

 Two sets of 105 km sub-sea pipelines to transport sour gas to the refinery in Assaluyeh

 Onshore gas refinery for separating condensates and removing sulfur from sour gas and injecting sweet gas into the cross-country trunk line IGAT 

The project objectives are to meet domestic natural gas shortages, increase exported gas and substitute natural gas consumption with other oil products. In order to achieve these objectives the following will be implemented:

• Lean gas to be transported 75 km by a dedicated 56 pipeline to the IGAT3 trans-national pipeline

• Ethane gas to be transported via a 16 pipeline to National Petrochemical Company (NPC)

• Treated LPG to be refrigerated and stored in double wall storage tanks and pumped into LPG carriers for export

• Stored condensate from storage tanks to be transported via tie-in to the phase 1 SBM for export

South Pars Phases 6, 7 & 8: Petropars was awarded Phases 6, 7 & 8 of the South Pars Gas Field in 2000 by National Iranian Oil Company (NIOC).  Phase 6, 7 & 8 is to produce gas and condensate from wellheads located 105 km off the Iranian coast.  The main objective is to transmit dry sour gas through a 56” pipeline, 512 km for injection into Aghajari oil field to compensate for insufficient pressure of the oil wells. 

In December 2002 Petropars signed a partnership with Statoil, a Norwegian company, as the operator of offshore drilling and facilities for this project.  In May 2003 Petropars awarded construction of the onshore facilities (refinery and associated construction work) following a bid process to a joint venture of Iranian, Japanese and Korean companies, namely Toyo (as the leader), IDRO, JGC and Daelim.

The onshore refinery (process facilities) in Assaluyeh will produce:

• Conditioned gas to be injected into the Aghajari oil reservoir through a 512 km 56” pipeline

• Stabilized condensate for export by marine vessels

• Treated C3/C4 LPG for export 

The pivotal and most important common factor among all of these projects is its Iranian essence. It is the first time in Iranian history that such colossal world-class projects are being executed and managed by Iranians. The true benefit and value of these projects lie in the gained skills, knowledge and experience in different engineering and management disciplines which will help us create a brighter future for our country and generations to come.