Bids invited for South Pars 19-22

03 March 2006

Pars Oil & Gas Company (POGC), a wholly-owned subsidiary of National Iranian Oil Company (NIOC), has invited international contractors and joint ventures to prequalify by 1 April for the buyback contract to develop phases 19-22 of the South Pars gas field. The tender is the first covering more than three phases simultaneously and is likely to be worth about $4,000 million. The two previous tenders, for phases 15-16 and 17-18, were both awarded to local contractors in 2004, but neither has yet moved into the engineering phase, which is understood to be partly due to the absence of foreign partners (MEED 17:2:06).

The four new phases will produce 3,530 million cubic feet a day (cf/d) of treated natural gas for the domestic gas network. They will also produce 2 million tonnes a year (t/y) of petrochemical-grade ethane, 2.1 million t/y of premium-grade liquefied petroleum gas (LPG) for export and 160,000 barrels a day of treated stabilised condensate, also for export. Sulphur recovery will be at a rate of 1,000 tonnes a day and is intended for export.

The contract will entail the fabrication and installation of four wellhead platforms with utilities, the drilling of four appraisal wells and 44 development wells and the laying of four 32-inch-diameter sea lines and four 4.5-inch piggy-back lines, each with an approximate length of 135 kilometres.

It will also involve installing a standalone onshore gas treatment plant at the second site development of the Pars Special Energy Economic Zone at Akhtar, 50 kilometres northwest of Assaluyeh. The plant will consist of four identical trains with capacity of 1,000 million cf/d each. The utilities and offsites required will include a 1,000-MW power plant, an LPG jetty, seawater intake and desalination. More than half the work must be carried out by local contractors.

POGC has not yet specified a schedule for the project, but oil industry sources in Tehran say a tender will be issued in the third quarter of this year with a likely bid deadline in early 2007. Appetite for the project among international oil companies and contractors should be high but could be reduced by perceived heightened political risk over Iran's nuclear programme.

So far, only South Pars phases 1-5 have been brought on stream. Phases 6-8 are under construction and are likely to require expanded onshore facilities to accommodate higher-than-expected quantities of gas. Phases 9-10 are running behind schedule. POGC managing director Akbar Torkan said in late February that he expected to sign development agreements very soon for phases 11 and 13, both of which will supply feedstock for planned liquefied natural gas (LNG) projects.

Phases 15-16 were awarded last year to a consortium of Khatam ul-Anbia (Ghorb), the Islamic Revolutionary Guards Corps engineering wing, and Iran Marine Industries Company (Sadra). No contract has yet been signed. Phases 17-18 are being carried out by another local consortium comprising Industrial Development & Renovation Organisation, which recently replaced Oil Industries Engineering Company (OIEC), Petropars and Iran Offshore Engineering & Construction Company. An engineering, procurement and construction (EPC) tender is expected for the project later this year.

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