South Pars Phase 12 sweetening gas contract inked

November 5, 2007

TEHRAN (PIN) – The contract on sweetening gas produced by Phase 12 of South Pars field, the first package of Iran LNG project, was signed in the presence of Iran’s Acting Oil Minister Gholamhossein Nozari here Sunday.

Managing directors of “Iran LNG Co.”, Farab, Namavaran companies (both of Iran), and an Italian enterprise signed the contract in the central building of Petroleum Ministry.
The contract’s price is over 400 million euros and will be implemented in 24 months.
The managing director of LNG Co. announced that “Iran LNG” project aimed to produce 11 million tons of liquefied natural gas by 2010 and the figure would soar to 88 million tons by 2020.
Ali Kheir-Andish added “Iran LNG” project would double its output every three or four years without any domestic and foreign investments.
“If the project comes on stream in Dec. 2010, its LNG production capacity will reach 22 million tons in June 2014, will hit 44 million tons in Dec. 2017, and touch 88 million tons in 2020,” said the official.
He, however, said the LNG output in the years to come would depend on Petroleum Ministry’s policies.
Packages 2 and 3 of “Iran LNG” project were signed last Feb., recalled the official, adding a contractor was to be hired for the first package, but the attempt failed and Package 1 was divided into four smaller packages.
He expressed hope that LNG export would be a suitable replacement for oil export through the implementation of “Iran LNG” project.
Kheir-Andish said Package 1 comprised four sections and Iran Power Plant Projects Management Co. (MAPNA) took the responsibility of power plant and electro compressor sections after several sessions and negotiations.
He added e-LNG section constituted 30 percent of “Iran LNG” project and “Iran LNG” project made a 50 percent progress after the signing of contract with MAPNA and the related operations’ progress would soar to some 70 percent as the contract on gas sweetening was inked.
Iran LNG Co. managing director said the gas liquefaction contract would be inked in late Dec.
He expressed hope that “Iran LNG” project, due to support from Petroleum Ministry, contractors, and advisors, would become operational by the end of 2010 and the first LNG carrier would ship the first liquefied natural gas cargo at that time.
Given the recent contracts signed for the “Iran LNG” project, the country would export 12 billion dollars worth of LNG per annum and the figure would reduce to 5 or 6 billion dollars in case next contracts were not desirable.
Kheir-Andish said “Iran LNG” project needed a four billion dollar fund and its turnover would amount to six billion dollars.
According to him, e-LNG project was comprised of a combined cycle power plant with a 840 megawatt capacity, subsidiary installations, and six 70 MW electro compressors.
Iran’s acting oil minister said the signing of e-LNG contract conveyed the important message that the country was determined to carry out projects by domestic contractors.
Gholamhossein Nozari made the statement in the signing ceremony of “Iran LNG” project.
Addressing French President Nicolas Sarkozy, the caretaker warned if the contract of Pars LNG project were not finalized with France’s Total, Iran would implement the project.
He said the Pars LNG contract had not been yet finalized as Iran had not accepted Total’s final investment decision (FID), adding the French company had not voiced its unwillingness to make investment in the project.
“Total, in its proposed FID, has announced that it will invest some 11.2 billion dollars in Phase 11 of South Pars gas field and Iran has dismissed the amount as unacceptable,” said the top official.
He ruled out the news that Total had reached an impasse in Iran’s Pars LNG project.
“Total is keen to implement the project,” said the acting oil minister, adding Iran had proposed the French giant to divide the project into smaller packages in a bid to slash costs.
Nozari, however, reiterated that Iran would not wait for any country for the implementation of domestic projects.
Pointing to huge oil and gas reserves of Iran, the ranking official said the world was in dire need of energy and no company could ignore Iran.
“Total is one of the giant foreign companies that should seek trustworthy reserves for its survival in the international market,” he noted.
“Nozari is rich with oil and gas resources, but never denies any company of investment on its soil.”
He termed LNG projects as complicated, reiterating that the presentation of project in one package was to blame for its high cost and the project was divided into some packages in an attempt to reduce the expense.
According to him, some contractors, not of top foreign companies’ caliber, have signed the related contract.
Manager of Total Christophe de Margerie said the giant energy group would press on with talks on Pars LNG, Iran’s first liquefied natural gas export terminal, a project which requires a $15 billion investment, adding Total would look at the political situation only once a deal is ready.
“The e-LNG contract’s price is amounted to 973.5 million euros,” said the Iranian acting oil minister, adding Petroleum Ministry and Bank Mellat would fund the project and the ministry had so far allocated 100 million dollars for the preliminary operations of the project.
National Iranian Tanker Co. (NITC) managing director said the country would produce over 80 million tons of liquefied natural gas per annum in the upcoming years and 40 LNG carriers would be required to transport some of the product.
Mohammad Suri told PIN that Iran would sign a trilateral contract on the building of LNG vessels and exports.
“Concurrent with the signing of the contract on gas production, LNG plant, and export docks, the contract on the building of LNG carriers should be inked and the issue demands the finalization of LNG contracts,” said the NITC head.
According to Suri, the first cargo of Iran’s LNG would be shipped in 2011 and a 150 thousand cubic meter LNG carrier is needed to transport one million tons of liquefied natural gas.
“Given the plan on production of more than 80 million tons of LNG annually, we have to build at least 40 vessels to carry 50 percent of the product,” reiterated the official.
He added South Korea, Japan, and China were the builders of 90 percent of LNG carriers in the world and Spain and France constructed a limited number of the vessels.