With foreign companies absent, Iran has signed a contract with domestic firms to implement pressure-boosting measures at South Pars, the world's largest gas field, which supplies 70% of the country's gas.
Despite possessing the world’s second-largest natural gas reserves, Iran faces domestic shortages due to insufficient investment in South Pars and holds only a small share of the global export market.
Iran’s Petropars, along with the Khatam al-Anbiya Construction Headquarters of the Islamic Revolutionary Guard Corps (IRGC), MAPNA Group, and Oil Industries Commissioning and Operation, signed a $17 billion contract this week to implement pressure-boosting measures in South Pars. Notably, these same Iranian entities signed a similar agreement a year ago, but for undisclosed reasons, a new contract was signed again.
This shared field with Qatar, which holds 14 trillion cubic meters of gas reserves on the Iranian side, has entered the second half of its lifespan and has been experiencing pressure and production decline since 2024. Without the installation of pressure-boosting facilities, its output is expected to drop by 10 billion cubic meters annually, unable to meet even domestic needs.
Previously, France’s Total, China’s CNPC, and Iran’s Petropars had signed a $5 billion contract to develop Phase 11 of South Pars and install a pressure-boosting facility. However, after the US withdrew from the JCPOA nuclear deal in 2018, both Total and CNPC abandoned the project. Half of the contract’s budget was allocated for drilling wells and constructing offshore pipelines to produce 50 million cubic meters of gas per day (mcm/d) at phase 11, while the other half was designated for building a 20,000-ton platform—15 times larger than existing platforms in South Pars—equipped with two massive 60-megawatt compressors and other facilities.
To maintain current production levels, South Pars requires 15 massive platforms and 30 large compressors, valued at approximately $37 billion.
Following Total's exit, which, along with a handful of Western firms, possessed the technical capability to construct such equipment, CNPC also withdrew, leaving Petropars solely responsible for the development. Consequently, Phase 11 of South Pars currently produces far below the targeted 50 million cubic meters, as the Iranian company has failed even to drill the necessary wells.
In the past decade, Petropars also developed Phase 12 of South Pars, aiming for 85 mcm/d production capacity. However, a confidential document from the National Iranian Gas Company (NIGC), seen by Iran International, reveals that current production from this phase stands at half that amount. On the other hand, Petropars relocated one of Phase 12’s platforms to Phase 11 instead of construction of new platforms for Phase 11.
Aside from Petropars, which has demonstrated poor performance in Phases 11 and 12, the Khatam al-Anbiya has signed dozens of oil and gas contracts with the Iranian government over the past years, none of which have been successfully implemented.
MAPNA, Iran’s largest thermal power plant contractor, is responsible for manufacturing compressors under the $17 billion pressure-boosting contract. However, in recent years, due to its inability to build compressors for high efficient combined-cycle plants, many of the power plants it constructed could not be converted into combined-cycle type, leading to severe electricity shortages in Iran.
It remains unclear how a company that has failed to produce power plant’s turbine compressors intends to manufacture huge compressors for South Pars' pressure-boosting project.
Despite holding the world’s second-largest gas reserves after Russia, Iran faces a massive gas shortage, which will worsen as South Pars' pressure continues to decline.
A document from Iran’s Oil Ministry, reviewed by Iran International, indicates that even if the $17 billion contract with domestic companies is implemented, it will only slow down the production decline in the Iranian section of South Pars—but the decline will continue nonetheless.
The Challenge of pressure decline in South Pars
An Iranian-born offshore platform designer working with Western companies—who has been involved in projects in the Qatari section of South Pars since last year— told Iran International that pressure-boosting for such a massive field is extremely complex, and it is unlikely that Iranian companies have the capability to execute such a project.
Due to the sensitivity of the issue, he requested anonymity but explained that gas production from this field has so far relied on the reservoir’s natural pressure of 120 atmospheres. Iran has merely drilled wells and laid pipelines to directly transport gas and condensates to onshore refineries: "But now, massive platforms—15 times larger than the standard platforms currently operating in South Pars—must be constructed. These platforms must be equipped with gas-liquid separation facilities so that gas can be transported using massive compressors, while condensates are separately pumped to onshore refineries using high-power pumps. Additionally, power plants must be installed on these platforms to provide the necessary electricity for the compressors and pumps”.
He said that only a handful of Western companies possess this technology, such as France’s Total and Germany’s Siemens, both of which have implemented pressure-boosting in the Qatari section of South Pars.
Details of Iran’s $17 billion contract with the four domestic companies indicate that instead of constructing 20,000-ton platforms, Iran plans to build smaller 4,000–5,000-ton platforms but in greater numbers. Additionally, the compressors planned for these platforms will have a capacity of 30 megawatts—only half the size of the massive compressors required.
However, Iran has no prior experience even in building even 4,000–5,000-ton platforms, and officials have stated that they are still working on developing the necessary infrastructure for such construction.