Production at Iran's massive South Pars gas field finally begins

Iran has commenced gas production from phase 11 of the South Pars gas field, a joint endeavour with Qatar. Although exact production levels were not disclosed, Iranian officials had previously stated that the initial output for this phase would be approximately 10 million cubic meters per day during the early production stages.

An official inauguration of production is scheduled to take place shortly, as confirmed by Khojastehmehr. "Gas from this phase has been sent to onshore facilities via the maritime pipeline," deputy oil minister Mohsen Khojastehmehr said. "At the moment four wells in phase 11 are producing," Khojastehmehr added.

Upon full development, Phase 11 is expected to yield an impressive 56 million cubic meters per day from 24 wells. Notably, this marks the culmination of the extensive South Pars gas field project, which faced nearly two decades of delays primarily due to international sanctions imposed on Iran regarding its nuclear program. These sanctions hindered the involvement of international oil companies, including Chinese and French firms, in executing multibillion-dollar contracts and providing Iran with the advanced technology required to address the low-pressure challenge at the field.

Khojastehmehr disclosed that a substantial $20 billion credit allocation has been earmarked to enhance the pressure within the South Pars gas field. In the preceding year, he had mentioned that domestic companies were actively conducting studies and preliminary engineering work on pressure-boosting technology.

In a separate development, on August 15, Iran and Armenia have extended a gas-electricity barter agreement until 2030, along with an augmentation in the gas volumes exchanged. The contract was formally signed in Yerevan on August 10. The Iran-Armenia gas export pipeline, with a capacity exceeding 1 billion cubic meters per year, had been underutilized, with only about one-third of its capacity in use. Further details on this extension were not provided.

Iran's current natural gas production stands at 1 billion cubic meters per day, with plans in place to increase production capacity by an additional 500 million cubic meters per day by 2029. Over the past Iranian year (March 2022-March 2023), Iran's gas consumption averaged approximately 630 million cubic meters per day. Iran continues to export gas to Turkey and Iraq, while maintaining swap agreements with Turkmenistan and Armenia.

On August 7, the Managing Director of the National Iranian Gas Company, Majid Chegeni, reported that the country had augmented gas exports by over 16% in the previous Iranian year, which ended on March 20. Talks are ongoing for the extension of contracts with Turkey and Iraq, according to Chegeni. "We have also had talks with Turkmenistan to sign a gas contract to import gas from this country. Iran's gas debt to Turkmenistan has been completely settled. The talks are being held for both short-and long-term imports," Chegeni said. "A trial imports of 10 million cu m of gas from Turkmenistan has been carried out successfully. In the next step and simultaneously when development projects of Turkmenistan's gas fields go on stream, we intend to increase the volume of imports," Chegeni said. "Gas swap with Turkmenistan has reached 8 million cu m/d," he said.