Industry Trend Analysis - Gas IPC Launched, Oil Still Struggling - SEPT 2017


BMI View: The signing of the first IPC with Total for the development of the South Pars phase 11 marks a significant milestone for Iran ' s upstream . Given Total ' s history in Iran and that the gas project will be able to navigate round a snap back of nuclear sanctions, this is one of a few a unique developments and we do not expect this to trigger a wave of new contracts .

Iran has made a partial breakthrough in converting its memorandum for the development of South Pars Phase 11 into a development and production contract. French company Total has committed USD4.9bn to develop Phase 11 of the South Pars field, one of the largest gas projects in the Persian Gulf. The deal is also the first project with a foreign investor agreed under the new Iranian Petroleum Contract (IPC) and the first new foreign investment in the Iranian upstream for over 10 years.

Phase 11 of the South Pars field is estimated to hold recoverable resources in excess of 350bn cubic metres of gas and 550mn bbls of condensate. The contract has been fixed over a 20-year period, with a possible five*year extension, in which the field will produce as much as 18bcm of gas a year and 80,000b/d of condensate. Total is due to take the final investment decision (FID) on the project on July 4, with a view to completing the project in an optimistic 40-month timeframe. First gas could arrive as early as late 2020 (see below in red shade). We have revised up our forecast from the early 2020s to reflect this new development.

South Pars Ramping Up
Iran Gas Production Forecast, bcm
f = BMI forecast. Source: BMI

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