Irans largest Natural Gas field is South Pars, geologically an extension of Qatars 900-Tcf North Field. South Pars was first identified in 1988 and originally appraised at 128 Tcf in the early 1990s. Current estimates are that South Pars contains 280 Tcf or more (some estimates go as high as 500 Tcf) of natural gas, of which a large fraction will be recoverable, and over 17 billion barrels of liquids (i.e., condensates - by 2010, South Pars could be producing condensates of more than 500,000 bbl/d, mainly for domestic consumption and Petrochemicals production).
Development of South Pars is Irans largest energy project, already having attracted over $15 billion in investment, but development has been delayed by various problems - technical (i.e., high levels of mercaptans - foul-smelling sulfur compounds - in the South Pars gas), contractual issues (i.e., controversy over buyback arrangements), politics, etc.
Phase 1, for instance, which is being handled by Petropars (owned 60 percent by NIOC), was delayed several times but finally came onstream, several years behind schedule, in November 2004. Phase 1 involves production of 900 million cubic feet per day (Mmcf/d) of natural gas for the domestic grid, plus 40,000-45,000 bbl/d of condensate.
Overall, South Pars is slated to be developed in 28 phases, although only 18 phases are active so far. According to FACTS, Inc., total condensate production from South Pars phases 1-14 is expected to reach 628,000 bbl/d by 2015. Total gas reinjection needs from South Pars are estimated by FACTS at 8-10 billion cubic feet per day (Bcf/d) by 2010-2012, although "field engineers think this may not be enough," with some citing the need for as much as 20 Bcf/d. If this latter figure is correct, it could cut significantly into the potential for South Pars gas exports, since future South Pars production is projected at perhaps 20 Bcf/d total - potentially all of South Pars future production according to FACTS. Ultimately, Iran could be faced with a choice between using natural gas for domestic purposes, or exporting it.
Natural gas from South Pars largely is slated to be shipped north via the planned 56-inch, 300-mile, $500 million, IGAT-3 Pipeline (a section of which is now being built by Russian and local contractors), as Well as planned IGAT-4 and IGAT-5 lines. Gas also will be reinjected to boost Oil output at the mature Agha Jari field (output peaked at 1 million bbl/d in 1974, but has since fallen to 200,000 bbl/d), and possibly the Ahwaz and Mansouri fields (which make up part of the huge Bangestan Reservoir in the southwest Khuzestan region).
Besides condensate production and reinjection/enhanced oil recovery, South Pars natural gas also is intended for domestic consumption and for export, by pipeline and also possibly by liquefied natural gas (LNG) tanker. Sales from South Pars could earn Iran as much as $11 billion per year over 30 years, according to Irans Oil Ministry. However, Iran likely will face stiff competition for LNG customers, particularly given the fact that many other LNG suppliers (Oman, Qatar, the UAE) are already players, having locked up much of the Far East market. U.S. sanctions also mean that Iran is limited to non-U.S. liquefaction technology, which is an important consideration given that most LNG plants use processes developed by U.S. companies. Currently, Iran has no LNG facilities.
In February 2003, Oil Minister Zanganeh officially inaugurated Phases 2 and 3 of South Pars development, which began to come onstream in March 2002. A consortium led by Total – and including Petronas and Gazprom - developed the project at a cost of approximately $2 billion. Currently, phases 2 and 3 are producing around 2.8 Bcf/d of natural gas for domestic use, plus 80,000 bbl/d of condensates. Twin undersea pipelines carry gas from South Pars to onshore facilities - natural gas processing trains, sulphur recovery units, condensate stabilization and storage units, and export compressors-at Asaluyeh.