By Mahnaz Abdi

Kish gas field still waiting for development

November 20, 2017

Kish gas field, discovered in 2006, is the second largest gas field in the Persian Gulf and also Iran’s largest reserve of natural gas after South Pars field shared by Qatar. 

The giant gas field lying under Iran’s Kish Island is estimated to hold 66 trillion cubic feet of gas in place, of which 50 trillion cubic feet is recoverable. The field also holds at least 1 billion barrels (160 million cubic meters) of gas condensate, of which 331 million barrels (52.6 million cubic meters) are recoverable.

The project for development of the field started in late March 2007 through allocating $2.2 billion from the internal sources of the National Iranian Oil Company (NIOC) for conducting the first phase of development by Petroleum Engineering and Development Company (PEDEC).

Then in February 2010, an Iranian consortium headed by Bank Mellat signed a $10-billion agreement with NIOC to develop the field.

In a meeting participated by the oil minister on April 19, 2014, it was approved that the field would be developed by producing 1 billion cubic feet of gas and 11,300 barrels of condensate during 18 months in the first phase. 

The field is projected to be developed in five phases each to produce 1 billion cubic feet of gas per day. 

But, implementation of the project to start production from the field has been postponed for a number of reasons among which protection of environment has been the major one as the field is under Kish Island, a major tourism hub of Iran.

To avoid environmental damage to Kish Island, while all of the 14 onshore wells are being dug on the island, the four projected gas refineries were decided not to be built on the island and instead they will be constructed in a region called “Garzeh” some 18 kilometers far from the island on the coastline of Bandar Lengeh County of the southern Hormozgan Province, and the extracted gas will be transferred to Garzeh via a 19-kilometer pipeline.

Iran has already signed memorandums of understanding (MOUs) with some domestic and international companies on conducting studies on development of Kish gas field. The companies include the Anglo-Dutch Royal Dutch Shell PLC, Italy’s Eni and Russia’s Gazprom in addition to Iranian companies Ghadir and Saane’.

Shell presented the results of studies on the gas field to NIOC on September 12. The parties discussed the results during a meeting in Tehran attended by senior officials including NIOC Deputy Director for Engineering and Development Gholamreza Manouchehri and PEDEC Managing Director Noureddin Shahnazi-Zadeh as well as Hans Nijkamp, the head of the department for Iran affairs at Royal Dutch Shell.

Development of the field will be offered on tender based on Iran’s new model of oil contracts known as IPC.

In an interview with ILNA on November 14, Shahnazi-Zadeh mentioned Shell as the most serious company to develop the field.

“We have already started development of the field, while we have also signed MOUs with some companies on studying the field which some of them are not still finished.  As soon as all the results are ready we will start negotiation with the investor in the framework of the IPC to begin the development process”, the managing director explained.

“We had started phase one some years ago which was stopped due to changing the investor. We have now resumed the project to supply gas to Kish Island in the first step and at the same time we send some part of gas produced in the first phase to Assaluyeh Port [an energy hub in southwestern Bushehr province]  to be refined in one of the refineries over there”, he added.

While the long-time disputes over environmental issues of the project are somehow over by the decision to establish the refineries in Garzeh and also despite the willingness from both Iranian and foreign companies to conduct the project, Kish gas field is still waiting for development.

Although Shahnazi-Zadeh has said: “We have started phase one in order to prevent from loss of time.”


 

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