Iran is to award a contract worth $440 million to a domestic company for production of gas at a major oil field south of the country.
The official IRNA agency said in a Sunday report that the Petropars Group would take over development activities for gas production at Belal Oil Field which straddles the maritime boundary between Iran and Qatar in the Persian Gulf.
Reza Dehghan, a senior official from Iran’s Oil Ministry, said the contract with Petropars would be signed in the next two weeks.
He said the Iranian company would be supposed to produce 500 million cubic feet (over 14 million cubic meters) a day of gas at Belal, a field shared with Qatar which is located 90 kilometers southwest of Iran's Lavan Island and adjacent to the South Pars Gas Field.
Dehghan would not elaborate on further details and when production is expected to start as part of the contract. However, a notice on the website of the Pars Oil and Gas Company, which is involved in the contract, said the project would take 34 months to finish.
The official said the sour gas produced in the field will be piped through idle facilities existing in the South Pars to a refinery in Kangan, located onshore in the southern Iranian province of Bushehr.
A total of eight wells will be drilled in the field, said the report by IRNA, adding that six wells will exclusively pump gas and two others would serve analysis and learning purposes.
Industry sources said Iran would finance the megaproject through its national sovereign fund, adding that plans were in place to further expand gas production at Belal which is believed to hold six trillion cubic feet (nearly 170 billion cubic meters) in gas reserves.
Contracting an Iranian company for such a large project comes amid sanctions imposed by the United States which have limited Iran’s ability to involve foreigners in its oil and gas projects.
Iranian companies have become involved in deals to expand South Pars, the world’s largest gas field, especially in projects abandoned by foreign companies since American sanctions began in November last year.
Iran has the second largest gas reserves in the world although the country has a long way to go to attain the complicated technology needed to tap into those resources.