The China National Petroleum Corp. (CNPC) still has a contract for work developing Phase 11 of the 29-phase South Pars project.
But the Trend news agency reports that CNPC has not started any work in the Persian Gulf despite holding its contract for 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.
Trend reported Sunday that Oil Minister Rostam Qasemi announced he has now given CNPC until Now Ruz to start work or lose the $4.7 billion contract.
Musa Suri, the managing director of Pars Oil & Gas Co,, which oversees all the work on South Pars, was quoted as saying, “Iran is dissatisfied with CNPC’s frequent delays of Phase 11 development.”
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 and where they will find all the capital required to pay for that equipment.
The Oil Ministry says it has allocated more than $26 billion for South Pars development in the current 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 took effect and when oil prices were higher than now.
Meanwhile, Iran continues to lay down its sixth cross-country gas pipeline, this one headed from the southern gasfields to the Turkish border, from which it is intended to pipe the gas onward to Europe. However, the EU decided a few years ago that it would not import any Iranian gas until the nuclear issue has been resolved.
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. It 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.