TotalFinaElf officials say the two phases are producing well above the original target levels of 2,000 million cubic feet a day (cf/d) of gas, at about 2,800 million cf/d, as a result of higher than expected production flows. Only 15 out of 20 planned wells have been drilled so far: the remaining five wells are due to be completed in the second quarter of 2003.

The gas is treated at four onshore gas trains with capacity of 500 million cf/d each before being pumped into the domestic gas grid via the third Iranian gas trunkline (IGAT 3). The project, which is located near Bandar Assaluyeh, is expected to reduce or eliminate any gas shortages in the country.

Phases 2 and 3 also produce about 80,000 barrels a day of condensate and nearly 400 tonnes a day of sulphur, with both products set for export to international markets.

TotalFinaElf officials say company staff will stay at the site beyond the time of the transfer of operations to SPGC in January to provide supervision services.

Under the buy-back contract signed in 1997 with Pars Oil & Gas Company, the company in charge of the South Pars development, TotalFinaElf and its partners Gazpromof Russia and Petronasof Malaysia, will recover their investment over a period of seven years. South Pars 2-3 is the second project completed by TotalFinaElf following the successful completion of the development of the Sirri A and E oil fields in 2000 (MEED 1:12:00).

The successful conclusion of the landmark scheme is likely to strengthen TotalFinaElf's position in its bid to carry out a local liquefied natural gas (LNG) project in partnership with National Iranian Oil Company (NIOC)and Petronas. Called Pars LNG, the scheme is part of NIOC plans to set up four LNG plants to be fed with gas from South Pars phases 11-14 (MEED 15:11:02).

TotalFinaElf officials say a shareholder agreement between the three partners is expected to be signed within weeks. The next steps will then involve marketing the plant's output and the appointment of a financial adviser.

However, it is understood that several issues have yet to be resolved between the French company and NIOC. The main question is whether the scheme will be carried out on an integrated basis, combining both the upstream and downstream elements, or as two separate projects.

TotalFinaElf says the LNG project is planned to produce about 8 million tonnes a year of LNG.