Recently there were two different reports on the approach taken by the Iranian and Qatari governments to exploiting gas reserves at South Pars gas field. The first report had it that the Qatari government has stopped new investments on its oil projects and has moved to fund projects related to South Pars gas field, which they call North Gas Field. At the same time, managing director of Iran’s Pars Special Economic Energy Zone, which is in charge of exploiting the South Pars gas field, has noted that five phases of South Pars gas field will become operational next year, all of which are behind schedule now. South Pars gas field, which was discovered by Iran, enjoys 14,000 billion cu. m. gas, thus, accounting for 8 percent of the world’s and 50 percent of the country’s gas reserves and is among the biggest gas fields in the world.

The South Pars gas field was discovered by the National Iranian Oil Company in the first half of the Iranian year 1350 (1971-72) and straddles the sea border between Iran and Qatar. It is located 100 km to the south of the Iranian coast in the Persian Gulf. Qatar started to exploit the field in 1987 while Iran started 10 years later. When Iran initiated gas production from phases 2 and 3 of South Pars gas field – that is, 50 million cu. m. a day – Qatar was drawing about 7 billion cubic feet (200 million cubic meters) gas from the field. Iran had planned to catch up with Qatar by 2007.

However, the country has never achieved that goal and it seems that due to the new plan considered by Qatar to speed up exploitation of the field, Iran should review its plans for developing the field, because the existing policies cannot help Iran catch up with its southern neighbor. In addition, for everyday of delay in exploiting every phase of the field, Iran will suffer a loss of about 6 million dollars which heavily bears down on the ailing economy. Qatar will not reveal any information about new projects on the field, at least until 2011 or 2012, when studies on the location of the huge North Gas Field (known as South Pars in Iran) and ongoing projects reach a decisive conclusion. Reuters has reported Faisal al-Suwaidi, managing director of Qatar Gas Company, as saying that his government gives priority to completing the underway projects. He has added that studies will not be complete before 2011 or 2012. Earlier this year, he had been quoted as saying that the studies would be finished by 2009. For international companies which are competing in upstream oil and gas operations in the Middle East, any delay in a project is considered a lethal blow. The North Gas Field (South Pars) is the biggest reservoir containing pure gas in the world. The Qatari official has added that since Qatar is planning to implement development projects of the field at the highest speed possible, as long as all information obtained from the wells have not been tested, studies cannot be considered conclusive and there are still about 100 more wells which are to be drilled.

Qatar has also planned to increase its liquefied natural gas output from the current figure of 32 million tons per year to 77 million tons by 2010. The country is currently the biggest producer of liquefied natural gas in the world. In April 2005, Qatar decided to postpone new projects until studies on the behavior of North Gas Field are finished. The American ConocoPhillips and Marathon companies were planning to build liquefied natural gas plants in Qatar. As a result of new studies, those projects have been postponed. Meanwhile, Qatar is planning to double the capacity of a refinery whose construction is underway at Raas Lafan in order to increase its capacity from the current figure of 146,000 barrels per day to 292,000 barrels per day.

Al-Suwaidi has noted that the refinery will be streamlined through the project boost, or through construction of a new petrochemical plant or both. He added that it will cost about 800 million to one billion dollars to double the refinery’s capacity. The petrochemical plant will be built to product aromatics (like benzene). In the future, every petrochemical plant in Qatar will need propane or butane as raw material more than ethane. Al-Suwaidi has added that the ethane gas produced in Qatar would be set aside for use by petrochemical plants. He has announced that Qatar has authorized Germany’s Wintershall, Japan’s Cosmo, and Indonesia’s Pertamina companies to explore Block 3 and other blocks are ready to go on tender. To meet rapidly increasing domestic needs, Qatar is paying special attention to developing the second phase of the gas project at Barzan. The second phase is to produce about 2 billion cu. ft. gas per day and will be developed by Qatari gas supplier, Raas Gas. The Qatari official has not explained about the role to be played by the main developer of the project, that is, ExxonMobil, or when the new phases will be probably made operational. The growing domestic demand in Qatar has amazed observers since it stands at about 12-13 percent per year.