Iran's South Pars gas field's Phase 11 commences production amid decades of delays

The long-anticipated Phase 11 of the South Pars gas field has commenced production, marking a significant milestone in Iran's oil and gas sector. As of August 12, four wells in Phase 11 began early-stage gas production, with the output directed to the onshore refinery of Phase 12.

This development comes after a series of delays spanning two decades, with both Iranian and international companies, including France's TotalEnergies (previously Total SA) and China's CNPC, facing challenges in bringing the phase to operational status. The initial contract, valued at $4.8bn, was signed in 2017 but faced execution delays due to sanctions.

The current production from these wells stands at approximately 11mn cubic metres per day.

Plans are underway to increase this figure, aiming for a daily production of 56 mcm.

The ambitious target will be pursued through drilling additional wells and installing new infrastructure in Phase 11.

Phase 11 of South Pars is the only undeveloped phase of this shared gas field. Despite being on the sea border, its development has been repeatedly delayed by both Iranian and foreign companies over the past two decades.

In the latest episode of delays in the development of this important phase of South Pars, in 2017, a contract for the development project of Phase 11 of South Pars, worth $4.8bn, was signed in the presence of Bijan Zanganeh, the then Oil Minister, between the National Iranian Oil Company (NIOC) and a consortium consisting of then Total of France, China National Petroleum Corporation (CNPC) and Petropars.

Total led the consortium for the development project of Phase 11 of South Pars, with the French company holding a 50.1% stake, CNPC owning 30% and Petropars with 19.9%.

According to the initial schedule, gas production from the Phase 11 field of South Pars was set to begin 40 months after the signing of the contract. In other words, if this contract had been executed and Total and CNPC had not defaulted, the start of gas production from Phase 11 of South Pars would have been witnessed in the autumn of 2020.

However, the contract was not executed, and after more than two years of delay by the two French and Chinese companies, Phase 11 was eventually handed over to domestic companies for development.

Under the Raisi administration, that focused on making this phase operational, actions took place such as relocating the offshore platform from Phase 12 of South Pars and transferring it to Phase 11 of South Pars and drilling production wells in this phase.

It was anticipated that in the winter 2022 SP11 would witness the early production of gas from this phase at a rate of 11 mcm per day. However, this important task was postponed to the beginning of 2023.