New Player Set to Review Iran's South Pars 11 FEED

Australian engineering house WorleyParsons has signed an agreement with China National Petroleum Corporation (CNPC) to review a front-end engineering and design job left behind by departing French giant Total for Iran’s South Pars (SP) Phase 11 gas project.

The three-month job, which involves reassessment of the FEED by Total before it withdrew from the project last year, is at least the second for Worley-Parsons in Iran in 2010. It also coincides with an escalating campaign by the US to isolate the country.

The review will be assisted by CNPC’s offshore engineering outfit China Petroleum Offshore Engineering Company (CPOE) so that it can gain experience in the process.

China-based industry officials said CPOE is keen to get involved in the review as it aims to clinch a deal later to provide engineering, procurement and construction services for the field development. They said CPOE may face challenges from Iranian authorities who favor using domestic contractors for the job.

CNPC won the US$4.7 billion contract in June 2009 for the SP 11 gas projects as former operator Total was unable to make a commitment to the project because of US sanctions pressure and cost issues.

The June agreement, which only allows CNPC to operate the offshore and onshore gas producing and processing facilities, does not commit CNPC to get involved in the planned liquefied natural gas facility, Pars LNG, which was part of Total’s integrated proposal.

Total had an in-principle agreement with Iran in 2004 to develop South Pars Phase 11, targeting production of about 2.05 Bscf/d of sour gas to feed two, 10 million tonnes-per-annum LNG units.

China is aggressively pursuing energy development in Iran, where Western oil companies are reluctant to get involved amid the threat of possible United Nations sanctions against its nuclear enrichment program.

At the turn of this year, WorleyParsons teamed up with Linde of Germany to carry out a FEED for China National Offshore Oil Corporation’s (CNOOC’s) planned liquefied natural gas plant at the North Pars gas project. Both WorleyParsons and Linde worked in Iran before the intensification of Western sanctions against the country in the second half of the decade. In 2002, Linde agreed to provide the Statoil-Linde mixed fluid cascade process technology for the Iran LNG project. Two years ago, WorleyParson received another FEED contract from Iran through Iran Offshore Engineering & Construction for three topsides at Phase 12 of South Pars. – upstream