The South Pars gas field in the Persian Gulf, 100 kilometers from Iran’s Southern coastline is shared by Iran and Qatar. The field's first exploratory well was drilled in 1990.

In order to develop the gas field Iran’s oil ministry set up the Oil Engineering and Development Company. Since adequate funds were not available for the development of this gas field in the period immediately following the 1980-1988 Iran-Iraq war, the High Council for Economy decided to execute the project on a buyback basis.

South Pars gas field is a huge and unique field containing 8% of world’s gas reserves.

Recent seismographs and studies indicate that gas deposits in Iran’s portion of South Pars gas field is more than it was originally estimated. The volume of deposit in this field is some 13 trillion cubic meters that makes up 50% of the country’s total gas deposits. The volume of liquid natural gas (LNG) in this field is estimated at 17 billion barrels, which will most probably be more than the original estimates.

The first development phase of this field after a 20% progress was awarded to Petropars, which is an Iranian company registered abroad.

12 wells on two platforms are already drilled in this phase and construction works for on-shore refineries is 96% complete. Furthermore, some units have already been commissioned. In addition, as a result of installing production and residential accommodation platforms for some 100 staff, meshing of wells and lying of seabed pipe lines, the first phase of South Pars gas field will be operational in the near future.

The main partners for the projects are Iran’s Industrial Promotion and Renovation Co. and South Korean Dailem Co. with the utility sector left to the Iranian Mabna Co. entirely, which has employed a 60% majority of Iranian contractors and consultant engineers for the execution of the project.

Contracts for phase 2 and 3 were signed in 1997 on a buyback basis. The preliminary operation of the phases started on March 2001. The contractor for this sector is a consortium of French Total, Malaysian Petronas and Russian Gasprom, with 40, 30 and 30% shares respectively. The prime contractor of the refinery is South Korean Hyundai Company, which has employed 36 Iranian sub-contractors for construction.

Contractors of phases 4 & 5 are Iranian Petropars and Italian Ajip with 60% and 30% shares respectively.

Following awarding of contracts for the mentioned phases, 20% of shares was sold to Nico Co. and there are three companies working on this project now. Contract for these phases were signed in mid-2000 and its first unit will become operational by 2004.

Work on this project is going according to plan and upon commissioning, 50 million cubic meters of gas; 80,000 barrels of LNG and 400 tons of sulphur will be produced daily in this sector.

According to initial estimates these two phases will produce one million tons of LGP and one million tons of ethane annually. Ethane is used by petrochemical plants and has high added value.

Phase 6, 7 and 8 of South Pars gas field is also designed for production of 80 million tons of sour gas per day and it is intended that after sweetening and separation of liquid gas and adjustment of the dew point, the dried gas be transferred by a 512 km pipeline and through 4 pumping stations to Aghajari in the south of the country for injection into oil well in this region. In addition, some 500,000 tons of LPG in these phases will be separated and along with 120 tons of LNG will be exported to cover construction costs.

For implementation of these phases, three off-shore production platforms will be constructed and they will be connected to the refinery by three 32 km and 105 km pipelines. Contracts for the construction of pipelines, jackets and topsides for these phases have been concluded and Petropars chose Norwegian Statoil as its partner for implementation of this project.

Petropars is the prime contractor of the three phases and 40% of off-shore projects were awarded to the company recently, but Statoil will undertake off-shore works which, given the Norwegian’s experience in the field, is an appropriate decision. Working off-shore is a new endeavor for Petropars and it will gain valuable experiences. The construction of on-shore refinery has been put on tender and winner will be announced soon.

Phase 9 & 10 of south pars gas field are intended to produce 50 million barrels of LNG, one million tones of LPG and one million tons of ethane per day.

The refinery contract was signed in 2002 and its contractor is a consortium headed by LG Engineering and Oil Industry Construction Company from South Korea together with Sea Installation Company of Iran. In this project, 60% of projects have been awarded to two Iranian contractors and the South Korean contractor will carry out the remaining 40%. The difference between phases 1 to 8 with phases 9 and 10 is that the former phases are buyback but the latter phases are being implemented on a finance basis. The contractor has already submitted the letter of guarantee and in order to expedite the project, the contractor has received advance payment. Phase 9 & 10 like other phases have two platforms and 24 active wells and output will be transferred to the shore by two pipelines.

The sweetening refinery for these phases is located on the mainland and the project is similar to phases 4 and 5.

The location of phase 11 and 12 is outside Assaluyeh region, 70 km West of Assaluyeh in the direction of Bushehr in a region called "Tonbak". These two phases together with phase 13 are designed for LNG production.

Tender documents for phases 11 and 12 have been distributed and technical studies have been made. The winner of the tender for phase 11 will be announced in the near future.

Concerning phase 12, it has been decided to drill another descriptive well, gather further data and pass it over to bidders to enable them to submit more precise proposals. Facilities for phase 13 will also be installed in Tonbak region.

Phase 14 is designed for production of GTL and the objective is to convert the natural gas into semi-distilled products, which is a new technology.

14 phases have been determined so far and contracts for 10 phases have been concluded and formalities for awarding contracts for the remaining four phases are underway.