In December 2002 Statoil entered into a joint venture with the Iranian company Petropars, on a 40/60 basis respectively, for the development of the offshore part of the field. The operatorship was then transferred from Petropars to Statoil. At that point in time, Petropars had already established contracts with the main suppliers to the project, including the Iranian contractor, Sadra.
Statoil performed the direct management of the drilling program for 30 wells. In early January 2006, the drilling operations were finalized 40% faster than budget, saving 775 rig days.
The background for the cost increase and delay in the project is productivity and quality problems with Sadra, the contractor responsible for engineering, procurement, construction and installation of three platform topsides, plus laying of the remaining one of three approximately 100-kilometer-long pipelines from the field to shore.
Statoil has found it necessary to change the plans for the remaining part of the project, in order, together with the Iranian partner Petropars, to be able to meet delivery obligations to the owner, which is the Iranian state oil company, NIOC. A further strengthening of management resources and technical expertise at Sadra will be required, and the possibility of transferring parts of the remaining work to other contractors will be explored. Statoil has entered into a dialogue with Sadra on how the two companies together can implement these changes to ensure that the project can be finalized.
The additional costs to Statoil are dependent on evaluations and negotiations with our partner, Petropars, and Sadra. The question of how to cover additional costs will be decided through negotiations between Sadra, Statoil/Petropars and NIOC.
In the Statoil corporate production target for 2007, South Pars is included with full-year production of approximately 10,000 barrels of oil equivalent per day. Now, first gas is expected to be produced in the second half of 2007. However, every effort will be made to meet the target.
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