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Sanctions imposed by the West have only offered new opportunities for Iran, encouraging self-sufficiency in all spheres, especially energy.
Photo by ali Hassanpour
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By Ghanbar Naderi
President Mahmoud Ahmadinejad is expected to launch South Pars gas field’s phases 6, 7 and 8 in Assaluyeh, Bushehr province today, October 20.
Ministers of oil and industries and mines as well as several other high ranking officials will attend the opening ceremony.
The mechanical components of the gas-fire refinery for South Pars phases 6, 7 and 8 have been installed and now the refinery is ready to come on stream.
Phases 6, 7 and 8 refinery is projected to produce 172,000 barrels of gas condensates, 4390 tons of liquid propane and butane, and 370 million cubic meters of ethane gas daily to be fed to the Assaluyeh petrochemical units. The extra 3.64 billion cubic meters of gas will be injected into Aghajari oil region’s wells.
South Pars phases 9 and 10 will similarly come on stream in the near future. The 5 phases will add close to 50 million cubic meters to the country’s gas production capacity.
The total production of the three phases (except for sour gas and ethane gas) is estimated to be worth $15 million a day. IDRO, Japan’s Toyo Engineering Corporation, Japan Gasoline Company and South Korea’s Daelim Company have jointly implemented the project in 5 years at a cost of $2.05 billion.
In an attempt to control growing domestic gas demand and decrease subsidies for high-volume end-users, Iran raised domestic prices substantially, especially for residential and commercial use, using a pricing mechanism based on consumption that can elevate the price to nearly eight times the former base price of 39¢/MMbtu. However, this mechanism has been unsuccessful in reducing demand. The country is expected to experience strong gas demand growth of 8 percent during 2008-20.
Accelerating demand is beyond National Iranian Oil Company’s (NIOC) control because of a disconnect between downstream and upstream activities. National Iranian Gas Company (NIGC), which controls downstream development, is separate from NIOC and has different planning views. The development of the downstream section has always been faster than upstream, and gas shortages may not be surprising, especially in peak winter demand.
Development of Phases 9 and 10, which would release 2 bscfd of gas to the domestic market, is nearing completion and gas is expected to flow from Phase 9 soon.
Phase 12, which will produce 3 bscfd of gas and 110,000 b/d of condensate, will not be completed until late 2012. About 1 bscfd of gas from Phase 12 has been allocated for domestic market.
However, another 2 bscfd of gas from Phase 12, which has been designated as feedstock for Iran’s LNG plant, might well be delivered to the domestic market until the long-delayed LNG project starts up in 2015.
NIOC and National Iranian Drilling Company recently signed a contract valued at more than $1 billion for drilling 27 wells in Phases 17 and 18, which are intended to produce 2 bscfd of gas and 80,000 b/d of condensate. They are expected to be completed in 2014.
In sum, the illegal sanctions imposed by the West have only offered new opportunities for the country, encouraging self-sufficiency in all spheres, especially energy. Seeing the three phases go on stream today in the giant South Pars gas field, Western experts say the US-led sanctions have indeed failed to bite and that future sanctions are likely to remain ineffective.