The Islamic Republic has fired the last foreign firm working on the development of the South Pars gasfield, booting out the China National Petroleum Corp. (CNPC) for failure to carry out promised work.
But CNPC actually pulled its staff out of Iran last year and abandoned work on Phase 11 of the South Pars project.
PressTV reported Monday that the National Iranian Oil Co. (NIOC) had signed a $5 billion buy-back contract with Petropars Ltd., an Iranian firm created by the NIOC, to take over CNPC’s Phase 11 contract. PressTV said the NIOC made the decision because CNPC was dragging its feet on Phase 11 of the 28-phase South Pars project.
CNPC was awarded a $4.7 billion contract in 2009. It replaced Total of France, which was accused of stalling and not doing any work—just as CNPC is now accused.
The Mehr news agency last year said CNPC had not even taken the most basic steps of fencing its work area or leveling the ground despite holding the contract for 1,130 days or just over three years.
All the other foreign firms that held contracts but were inactive were given deadlines to start work—and then fired when they failed to meet those deadlines.
The Trend news agency reported in June 2012 that then-Oil Minister Rostam Qasemi had given CNPC until Now Ruz 2013 to start work.
But CNPC didn’t wait for Now Ruz. Mehr said that by November 2012 CNPC had pulled its entire staff out of Asaluyeh, the Persian Gulf port city that is the base for work on the offshore South Pars gasfield.
Iranian firms have been assigned the contracts taken away from foreign firms. The Iranian firms are believed to have the required skills—many have worked on phases that are now completed—but it is not clear how they will get much of the hi-tech gear required at South Pars or where they will find all the capital required to pay for that equipment.
The Oil Ministry says it allocated more than $26 billion for South Pars development in the last Persian year. That is equal to almost one-third of all of Iran’s oil sales revenues in 2011, before the new EU and US sanctions pushed down Iranian exports and when oil prices were higher than now.
The Islamic Republic consistently says it is putting very substantial effort and capital into beefing up its production capacity for natural gas. But the customers for that added capacity remain elusive. At this juncture, it can only deliver gas via pipeline, which limits its options. And the only foreign buyer of any quantity of Iranian natural gas is Turkey, which is angry over the price Iran is charging.
Iran says it will soon be able to ship liquefied natural gas (LNG) by tanker to distant customers, but its limited access to the high tech gear needed to liquefy gas raises question marks over that goal.