Iran plans to invest $11 billion in its offshore fields to raise gas production capacity by 240 million cu m/d, oil ministry news service Shana reported Nov. 11, adding roughly 25% to its current output as the country tries to meet growing domestic demand.

Mohsen Khojastehmehr, managing director of state-owned National Iranian Oil Co., said that of the $11 billion in investment planned, $4 billion would be spent to develop the North Pars field, which could add about 100 million cu m/d.

The offshore Kish gas field will also see its first phase of development, while Phase 11 of the South Pars field and the onshore fields of the Iranian Central Oil Fields Company would also be part of the gas expansion plans, Khojastehmer said.

Officials have recently said the country’s total gas production was around 950 million cu m/d, including 628 million cu m/d from South Pars, 252 million cu m/d from other fields and 70 million cu m/d in associated gas.

That is down from the record 1.04 Bcm/d that then-oil minister Bijan Zanganeh had said Iran had achieved in February, with new supplies from South Pars coming online. Output in early 2020 was 670 million cu m/d, he had said.

Iran has relied on its giant offshore gas field South Pars for years, but its domestic consumption and export plans have made it turn to underdeveloped offshore reserves.

Gas accounts for around 70% of fuel use in Iran, with the household sector being the largest consumer at up to 400 million cu m/d on cold days, followed by power plants and petrochemical facilities.

With domestic consumption on the rise, Iran has had to cut its gas exports to Iraq, one of its main customers.

NIOC officials did not say where the funding for the gas investment would come from.

Iran, which sits on the second largest gas reserves in the world after Russia, faces cash shortages due to long-standing US sanctions that have restricted its oil sales.

“Unfortunately, necessary investment has not been made in the oil and gas industry over the past years while we need $160 billion to respond to this area’s requirements,” oil minister Javad Owji said, as quoted by Shana. “If we do not spend on development, we will turn to importers of these products in the future.”

A state economic committee report said Oct. 3 that the total income received from the country’s oil and gas condensates sales in the last Iranian year, which ended in March, was so low it equaled the income in the first six months of its current year.

Besides new drilling, Iran needs to modernize its aging facilities to overcome an alarming pressure fall in its gas rigs.

On Nov. 4, Mohammad Meshkinfam, managing director of the state-run Pars Oil and Gas Company, said an overhaul of platforms in the massive South Pars gas field had been completed.

“We are fully ready to daily produce 700 million cm/d of natural gas from 37 offshore platforms in the South Pars field,” Meshkinfam was quoted as saying by Shana.

But he said development of the field was nearing its peak, with production set to fall significantly in about four years.

Source » spglobal