The Royal Dutch/Shell Group, which in partnership with Spain's Repsolis promoting Persian LNG, has announced the signing of a HoA defining the project framework. The HoA is understood to refer to both the midstream LNG project development and to the upstream South Pars phase 13, which will provide the natural gas for the project. However, Shell says it is still two years from making a final decision on the project.

France's Total, working with Malaysia's Petronason Pars LNG, signed a shareholders' agreement with NIOC affiliate National Iranian Gas Export Company (NIGEC) in February to develop the project. However, negotiations have since been slower than expected and have focused on the upstream award of South Pars phase 11. Total and NIOC now say a deal is likely to be finalised early in the fourth quarter, allowing Pars LNG to proceed to the engineering stage.

For NIOC LNG, engineering is already under way. Paris-based Technipand Japan's JGC Corporationare working on the front-end engineering and design (FEED) package and a PMC contractor is now close to being selected. Bidders on the contract are the UK arm of Foster Wheeler, the UK's Costain Oil & Gas and France's Sofregaz. Final commercial proposals are due in early October and an award is scheduled for the middle of the month. The award of the EPC package is expected 12 months after the appointment of the PMC contractor.

The project's go-ahead is contingent on the selection of a foreign partner. Government-to-government agreements have been struck with both India and China, both of which would provide major markets for Iranian LNG. And as a further incentive to potential partners, Tehran has said it will favour LNG investors when awarding upstream oil acreage in the massive Azadegan north and Yadavaran fields.

However, contractors say they will be unwilling to bid on so complex a project if neither the promoter nor the offtaker had past LNG experience. The UK's BGis still in negotiations to come in on the project but its enthusiasm is reported to have dwindled, several years after starting talks.