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On July 27, Iran awarded Italian energy group Eni a majority stake in a $3.8 billion project to develop the giant Pars-e Jonoubi (South Pars) Gas Field in the Persian Gulf. The deal marks the biggest single foreign investment in Iran in the five years since Tehran reopened its vast energy sector to foreign companies.
Italy’s Eni takes a 60% share in the project to develop phases 4 and 5 of the South Pars – a field that holds 12 trillion cubic feet of gas, or 7% of world reserves. Iran’s private sector Petropars will take the remaining 40% stake in the project that should be producing the first gas and condensates in five years. Under the buyback deal, Eni will operate the field during the development stage before handing it back to the National Iranian Oil Company when output is brought on stream. Phases 2 and 3 of South Pars already are under development by a consortium led by France’s TOTAL. The French company in 1995 ignored U.S. opposition to Western investment in Iran and signed a groundbreaking deal to develop the Sirri Oil Field.
The agreement was signed in Tehran in the presence of the Iranian Minister of Petroleum Bijan Zanganeh and Eni’s CEO Vittorio Mincato, and Akbar Torkan, Petropars Acting Chairman and member of the Board of Directors.
The important agreement that was signed represents a significant step toward strengthening the ties and cooperation between Italy and Iran. The contract entrusts Agip Iran B.V. (60%), a subsidiary of ENI of Italy, as development operator and Petropars, the company with the Iranian capital (40%) as partner, with the development of the field which envisages the construction of two offshore platforms situated in approximately 70 meters of water depth and the drilling of 12 producer wells from each platform. The complex and articulated facilities also include the laying of two 100 km independent gas pipelines connecting the offshore platforms with the onshore treatment center. This treatment center will be built at Assaluyeh where the relevant infrastructures will allow the daily treatment of 56 million cubic meters of gas.
In a gathering attended by the CEO of Eni, the ambassador of Italy, executives of Petropars, members of Parliament and other officials, Bijan Zanganeh, Iran’s Minister of Petroleum said, “Having the second largest natural gas reserves in the world or more than fifteen percent of the world’s total, the Islamic Republic of Iran is intent on attaining a proper status in the global gas market, in addition to meeting its own domestic uses. It also aims at fulfilling its own responsibilities in the reliable supply of gas as a clean and environment friendly fuel as well as crude oil in the international oil and gas market.”
The next speaker at the gathering was the Chief Executive Officer of Eni, Vittorio Mincato, who said: “For someone like me, who has spent more than 40 years of his professional life in the Eni Group, this is a great day to remember. A day that evokes memories of a special relationship of cooperation between Eni and the Iranian people which - at times when the petroleum industry was something completely different and a few individuals were able to control it - developed new forms of collaboration, ties and friends between producer and consumer countries.
I believe, in fact, that the agreement we have signed today for phases 4 and 5 of South Pars has this aim and will contribute to strengthen the country’s industrial and economic structure.”