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Iran Faces Pressure Challenges in Asaluyeh Gas Reserves

Iran's natural gas infrastructure is confronting a significant pressure problem, particularly in the Asaluyeh region part of the South Pars field, which serves as the heart of Iran's gas production. This loss of pressure in the gas reserves has raised alarms and drawn the attention of Iranian officials and industry experts. Iran and Qatar share ownership of the South Pars gas field.

Iranian First Vice-President Mohammad Mokhber recently underscored the severity of this challenge, emphasizing the urgent need for considerable investments in the Asaluyeh region, which stands as the heart of Iran's gas production. On 15 August, Mokhber, during a dialogue with state department experts and managers, indicated that an investment approximating $20 billion would be necessary to counteract the pressure losses within the reserves, ensuring sustained production. He stated that Iran invested in 75 oil and gas projects, totaling $38.6 billion. Furthermore, he highlighted that during the previous government's tenure, oil sales ranged from 300,000 to 400,000 barrels, while under the current government, they have surged to exceed one million barrels.

In June, Mokhber met with Qatar's Minister of Labor, Ali bin Samih al-Marri to discuss energy cooperation between the two countries. Mokhber said Iran and Qatar could become regional gas hubs through energy cooperation. Iranian oil minister, Owji in June that "Iran, with 33 trillion cubic meters of recoverable gas reserves, ranks second in the world in terms of reserves of this resource," adding, "We are striving to turn the Persian Gulf and Asaluyeh into a gas hub, with the assistance of Russia, Turkmenistan, and Qatar."

Over the years, top officials from the Oil Ministry have frequently addressed this concern. For instance, former Oil Minister Bijan Namdar Zanganeh stated in 2019 that an infusion of $5.6 billion was essential for reviving pressure in phase 11 of the South Pars field in Asaluyeh. Furthermore, Mohammad Meshkinfam, Managing Director of Pars Oil and Gas Company (POGC) in the same timeframe, acknowledged Iran's inability to domestically produce the requisite pumps and platforms for pressure augmentation in these wells. However, in a positive development, Oil Minister Javad Owji mentioned in June that Iranian engineers successfully relocated the 3,200-tonne platform from phase 12 to phase 11, initiating production in the latter.

Historically, international involvement was evident in this field, with both the French Total Company and China's CNPC engaged in developing phase 11. However, their participation ceased following US President Donald Trump's re-imposition of sanctions on Iran.

A commentator from the reformist Taadol Daily suggests that the pressure decline in the South Pars field can be attributed to Qatar's expansive production. The South Pars energy field, also known as North Dome in Qatar, is a vast energy reserve, with 33% in Iran's territory (Bushehr) and the remaining 67% in Qatar. Despite Iran's initial discovery of this energy trove, several factors, including wars and sanctions, allowed Qatar to capitalize on it faster, making more significant investments and extracting resources much quicker. This situation fostered a sense of being outpaced by Qatar in Iran for decades. He describes the key issues facing Iran in developing the area:

24-Phase Plan Stagnation: Iran planned 24 phases to exceed Qatar's production volume, but sanctions and technical problems hindered this ambition. Contracts with companies like Total became void due to sanctions, leaving Iran with incomplete development plans.

Technical Problems and Mismanagement: Interruptions in extracting reserves due to technical issues, sanctions, and mismanagement have consistently put Iran in a position inferior to Qatar. Despite managing to complete these 24 phases in some way, the path was fraught with problems. Leg l and Contractual Conflicts and delays in transitioning from one contractor to another, and Conflicts and unclear legal obligations, have caused fluctuations in the development process.

Pressure Drop and Inefficient Recovery: Recent disturbances, including a pressure drop in the fields related to Iran's sector, further exacerbated the situation. The pressure loss was caused by significant withdrawals by Qatar, coupled with Iran's failure to maintain its infrastructure and improve recovery.

Qatar's Advancements: Qatar's significant investments, utilization of up-to-date equipment and machinery, and effective resource management have caused a divergence in the two countries production. It has been reported that there is a 40 to 60 percent difference in the perceptions between the two nations regarding the field.

Need for Future Planning and Investments: Iran must continually plan and establish specialized communication with domestic and international experts to reap maximum benefits from the field and secure national interests. Ending sanctions and inviting international investors back to these fields is seen as a vital step.

The situation in Iran's South Pars gas field requires immediate attention and strategic investment to mitigate the pressure loss. Collaborative efforts with Qatar might be explored, but the path forward is fraught with challenges, including the lingering effects of sanctions imposed during Trump's presidency. These sanctions led to the withdrawal of international companies like Total and CNPC, causing delays and hindering technological advancement in the project. If these sanctions continue or are not adequately addressed, they may further hamper Iran's ability to attract the necessary investment and technical expertise to restore pressure and develop the field. Conversely, easing or lifting the sanctions could open the door to international cooperation and funding, potentially accelerating Iran's efforts to catch up with Qatar's production.

The recurring concern is Iran's apprehension about Qatar's extensive extraction activities in their shared field, fearing it might adversely impact the Iranian reserves. While Qatar undeniably extracts at least double the gas compared to Iran, the science of how natural gas movement underground might affect shared fields remains ambiguous. Many in the Gulf still recall Saddam Hussein's claim that Kuwait was siphoning off oil from the Rumaila field, a claim he used as a pretext to invade Kuwait. This backdrop intensifies the regional apprehensions of escalating political tensions over perceived gas displacement. Ultimately, to address this potential displacement, Iran needs to ramp up its gas extraction efforts to match, if not surpass, Qatar's pace, ensuring mutual respect for maritime boundaries.

In this regard, Improved relations with Saudi Arabia might offer Iran significant advantages in developing the field. It could be a game-changer if both nations collaborate on constructing pipelines to channel gas into Saudi Arabian territories. Yet, despite this potential, the ties between the two countries haven't seen substantial improvements or definitive actions. The emerging discussions about the potential normalization of relations between Israel and Saudi Arabia, which Tehran is against, could hinder Iran's endeavors in this direction.


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