Mohsen Paknejad emphasized that there should be no delay in implementing the pressure enhancement plan for the South Pars gas field.

The minister, speaking on Saturday during the signing ceremony of pressure enhancement contracts for the South Pars joint gas field, highlighted the significance of the presence of the country’s popular president at the event.

He noted that the president’s attendance was a major morale boost for oil industry workers, encouraging them to redouble their efforts. Paknejad stated that seven months into the 14th administration’s term, the signing of one of the largest contracts in the history of Iran’s oil industry marks a crucial step toward revitalizing the South Pars gas field.

He added that, according to the quantitative goals set in the Seventh Development Plan, the country’s crude gas production is expected to reach 1.34 billion cubic meters per day by the end of the plan. Achieving this target requires the development of gas fields and the implementation of production maintenance projects to prevent output decline.

The minister explained that expert estimates indicate that development and production maintenance projects will require approximately $75 billion in investment.

Of this, $53 billion will be allocated to developing new gas fields, while $22 billion will be dedicated to production maintenance projects, including the South Pars pressure enhancement plan.

Paknejad stressed that reaching the daily production target of 1.34 billion cubic meters of gas over the next four years will require an average annual investment of $19 billion.

Securing this level of investment demands meticulous planning and the effective utilization of all financial and monetary capacities within the country. The Oil Ministry has developed programs to optimally leverage these capacities, including resources from the National Development Fund and investments in energy-related industries such as electricity and petrochemicals, as outlined in the Seventh Development Plan.

He noted that Iran and Qatar have jointly extracted gas from the South Pars field over the past three decades, and it is natural for the field to experience pressure decline over time.

Qatar has already taken steps toward pressure enhancement by ordering necessary platforms and turbo-compressors, with plans to implement the enhancement within the next two years. This move will not only increase pressure in Qatar’s northern dome and boost their production but could also lead to some of Iran’s gas flowing toward Qatar due to pressure differences, underscoring the urgency of implementing the pressure enhancement plan in Iran.

$750b revenue increase from South Pars with pressure enhancement

The minister warned that, based on estimates, production from one phase of South Pars will decline annually starting in 2027, and by 2029, this decline could reach 1.5 phases per year, equivalent to approximately 42 million cubic meters per day, if the pressure enhancement plan is not implemented.

He noted that about 40% of the country’s gasoline production is a byproduct of South Pars, as gas condensates produced alongside natural gas are converted into gasoline, particularly at the Persian Gulf Star Refinery, which produces a significant portion of the country’s gasoline.

Paknejad emphasized that failing to implement the pressure enhancement plan would exacerbate the imbalance in gasoline supply. Achieving the quantitative goals of the Seventh Development Plan for gas and gasoline production depends on the execution of this project.

He explained that the pressure enhancement plan includes seven hubs, each consisting of six platforms: two for power generation, two for accommodation, and two for turbo-compressors. Each platform will house four turbo-compressors, totaling 56 high-capacity compressors across the seven hubs. Most of the equipment will be domestically sourced, with some assistance from foreign partners and technology transfer.

The minister estimated the cost of each hub at approximately $2.5 billion, with a total investment of around $17 billion required for the pressure enhancement plan. However, this investment is expected to generate an additional $780 billion in revenue from the field by 2056, making it imperative to proceed without delay.

Contracts signed with domestic contractors

Paknejad announced that contracts for the project have been signed with four prominent domestic contractors: Petropars, Oil Industries Engineering and Construction (OIEC), MAPNA, and Khatam al-Anbia Construction Headquarters, which will serve as the general contractor.

These contractors have valuable experience in developing the South Pars gas field and will subcontract to private sector companies, maximizing the use of private sector capacities.

He also acknowledged the efforts of the previous administration, noting that four preliminary contracts worth approximately $400 million were signed to familiarize contractors with the project, though no funds were ultimately spent.

Under the current administration, all contracts for the project, including an addendum to the IPC contract for Phase 11 and six EPCA contracts for hubs 2 to 7, have been prepared and are being signed today.

The minister emphasized that while the IPC contract has its own financing mechanism, extensive coordination with the National Development Fund is underway to secure financing for the EPCA contracts. The project will bring advanced knowledge and technology, particularly in the design and construction of heavy pressure enhancement platforms (weighing 7,000 to 8,000 tons), surpassing the current domestic experience of building platforms up to 3,500 tons.

Paknejad noted that the offshore structures for the project are estimated to weigh around 420,000 tons, compared to 200,000 tons installed in the South Pars offshore sector over the past 20 years. Additionally, 600 kilometers of subsea pipelines and more than half of the 56 turbo-compressors will be domestically manufactured, with 70% of the project’s execution carried out by domestic companies and suppliers.

He highlighted that the project will create approximately 17,000 direct and 50,000 indirect jobs, revitalizing oil-related industries. Paknejad urged the president to expedite the ratification of contracts and finalize financing with the National Development Fund and the Economic Council to ensure the strategic project begins as soon as possible.

In conclusion, the minister expressed hope that, with the cooperation of executive bodies, the project’s goals would be achieved within the specified timeline, safeguarding national interests in the joint field, managing energy imbalances, and fulfilling the objectives of the Seventh Development Plan.