A Norwegian-Iranian consortium has been awarded the development contracts for phases 15 and 16 of Iran's vast offshore South Pars gas field, an official said yesterday. The head of the state-run body dealing with the awarding of South Pars contracts, Akbar Torkan, told state television that Norway's Aker Kvaerner and Iranian firms Sadra and Khatamolanbia beat off tenders from three other consortiums. The value of the deal was not given, but similar contracts in the past have totaled about $1.5 billion. Under the Iranian constitution, foreign companies are not permitted an equity stake in any national oil or gas projects, but can participate under a buyback scheme enabling them to invest and later receive a portion of sales.

Torkan, the managing director of the Pars Oil and Gas Company, said the losing bidders were South Korea's Hyundai and LG, Britain's Foster Wheeler with Iran Shipbuilding and Offshore Industries Complex Company (ISOICO), France's Technip with Iran's Oil Industries Engineering and Construction (OIEC) in the second consortium, and Iran's Petropars and multinational ABB in the third consortium. Iran's natural gas reserves of 26.6 trillion cubic meters are the second largest in the world after Russia's. The country's reserves are located in onshore and offshore structures, with South Pars attracting most of foreign investment into the sector.

Geologically related to Qatar's 380 North Field, South Pars has been divided into 25 development phases and is estimated to hold 8-10 per cent of world reserves. The Iranian government plans to use South Pars to jumpstart a market in natural gas exports to Europe and Asia that can rival Qatar. Phases one to three of South Pars are fully operational, while phases four to 10 are under development.

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