Iran Puts South Pars Up For Bid

Iran has put the offshore South Pars oilfield back up for bidding and intends to reveal the winning investor this spring, reports a senior Iranian energy official. Pars Oil and Gas Company issued tender documents to 20 international companies and the winner will be chosen in approximately three months. Salehiforouz said the oilfield, buried in the giant South Pars gas field in the Gulf, would be developed under Iran's buy-back model which lets foreign firms recoup investment and get a profit by receiving part of the project's output. Now pumping 5,000 barrels per day (bpd), further development of South Pars is expected to yield 35,000 bpd in the first tranche and 100,000 bpd in the second. The recent tender marks the second time the offshore oilfield has been put on the block. The qualifications of the bidding firms in the previous tenders were not accepted, said Salehiforouz. But interest in South Pars is not confined to international companies. Local Iranian company Naftkav might be a contender for the oilfield, he said. South Pars is best known for its huge natural gas riches, estimated at 350 trillion cubic feet, and valued at $700 billion. Iran has ambitious plans for its gas sector, which holds the world's second biggest reserves after Russia. Development of the country's showcase South Pars gas field will be carried out in 30 phases, each requiring some $1 billion worth of investment. More than $7 billion in investment has been committed to the first eight phases of South Pars mainly through buy-back deals. Phases two and three, developed by France's TotalFinaElf, Malaysia's Petronas and Russia's Gazprom, will be inaugurated shortly after the start of the Iranian new year at the end of March. Start-up of the project, which aims to inject some 57 million cubic metres per day into Iran's natural pipeline system, was delayed from last October due to problems with labour, technical and administrative issues. Phase one, handled by National Iranian Oil Company (NIOC) affiliate Petro Pars, is due to come onstream in October.