Iran Drops Gazprom From Azar Oil Field Project

The National Iranian Oil Company (NIOC) said Iran has dropped Russia's Gazprom, one of he world’s largest oil and gas companies, from the Azar oil field development project due to the company's “numerous delays.”

“After several ultimatums and delays by Russia's Gazprom has been dropped from the development plan of the Azar joint oil field," the NIOC said in its statement [Mehr News Agency, 30 August].

The NIOC plans to sign an agreement for the development of Azar field that has a proven 2 billion barrels of oil reserves with a consortium of Iranian companies.

Photo: The Azar oil field, in Iran's western province of Ilam. Mehr Photo

Total ends fuel sale to Iran

The French energy company Total has stopped supplying fuel supplies to Iran, Total only makes up for a small amount of fuel deliveries to the Islamic Republic.

This has come as a result of the unilateral sanctions imposed on Iran by the United States, these sanctions aim to stop international companies such as Total from supplying Iran with petroleum products or investing in her oil and gas industries by preventing them from then trading in the US.

However these measures are not part of the all round sanctions approved by the UN to which China and Russia have objected.

Spain's Repsol has also pulled out of a contract to develop the South Pars gas field.

Even with its huge petroleum reserves Iran still relies on petroleum imports for 30-40% of its petrol requirements.

Iran Losing Race to Qatar in Developing Natural Gas Fields

Correction: The word “Losing” in this post’s original title was misspelled and is now corrected. Our apologies to our readers for the mistake.

South Pars/North Dome natural gas field is the world’s largest, located in the Persian Gulf and shared between Iran and Qatar. The huge field covers nearly 4,000 square kilometers inside Iranian territorial waters, known as South Pars. Qatari field covers 6,000 square kilometers and is known as North Dome. The field’s reserves are estimated at some 1,800 trillion cubic feet (tcf), making it the world’s biggest hydrocarbon accumulation (for comparison, the field’s volume of natural gas reserves is 360 billion barrels of oil equivalent).

The Qatari government so far has invested more than $400 billion in developing North Dome, including the construction of the world’s most modern liquid gas plant and terminal. Iran has invested only $40 billion on South Pars and associated investments in Assaluyeh. As a result, Qatar’s natural gas production from the field surpasses Iran’s by an order of magnitude.

Iranian efforts in developing the South Pars had been hampered by construction delays, which is led by Khatam-ol Anbia, the construction arm of IRGC. Only seven out of the planned 28 phases of construction has been finished so far. ILNA reports that Iranian experts do not expect completion of any additional phases in the next two years [ILNA, 1 March 2010]. Meanwhile Qataris are racing to further develop the North Dome.

As much as IRGC is regarded as the country’s most competent fighting force, their foray into business ventures, such as South Pars, is resulting in major problems for the country’s development projects.

The Iranian government’s economic policies have also greatly contributed to the problems in South Pars. In the first four years of Ahmadinejad’s administration, Iran was selling its crude oil at record prices, reaching $140/bbl. But the government allocated only a small portion of its fortune to develop country’s gas and oil fields. ILNA reports that last year, only 13% of oil revenues were earmarked for oil and gas field maintenance and investment projects [ILNA, 1 MARCH 2010].

It seems a combination of government’s resolve to invest in country’s future and IRGC incompetence in leading civilian development projects are the factors behind Iran’s loosing its race to Qatar in developing its natural gas resources.

Gazprom to Develop Oil and Gas Fields in Iran

Russia’s giant oil monopoly Gazprom will participate in the development of two sectors of the energy-rich South Pars gas field in the Persian Gulf. Gazprom will extract gas condensate at South Pars.

In 1997, Gazprom participated in the development of Phase 2 and 3 of South Pars as a 30% shareholder in an international consortium headed by France’s Total (40%) with participation by Malaysia’s Petronas (30%). The consortium built two offshore platforms with 10 production wells each, two 100-km (62-mile) underwater gas pipelines and an onshore gas plant with annual capacity of 20 billion cubic meters.

Gazprom will also participate in extraction of oil in Iran. The Iranian Oil Ministry did not disclose the locations awarded to Gazprom for oil exploration.

The new agreement with Gazprom comes 100 years after Anglo-Persian Oil Company’s oil strike at Masjid Soleiman in 1908. Anglo-Persian is now called BP.