Back from the wilds of Asia. Just in time to witness one of the most critical new field start-ups the global oil sector has seen in years.
That’s the South Pars offshore field on the Iran-Qatar border. Which was officially commissioned this week, according to reports from Iran’s oil ministry yesterday.
What makes this project so important? Size — with the South Pars field holding more than 14 billion barrels, according to estimates from local engineers.
The beginnings for the field will be relatively modest. With Iranian officials saying that production has initially commenced from seven wells, with output to rise to 35,000 barrels per day over the coming week.
But given the massive estimates on the size of the South Pars reserves, this is a spot that could see production ramp up very significantly. With a number of other facts about this mega-project showing just how far Iran has coming along in bringing on new crude supplies.
For one, South Pars is a very advanced project from a technical perspective. With production here achieved through the use of a floating production storage and offloading vessel, or FPSO — a next-generation piece of equipment that allows crude to to be loaded for sale right at the wellhead.
Even a few years ago, it’s unlikely a pariah nation like Iran could have delivered such advanced technology. With this week’s start-up showing how the project development environment has changed for the better here.
That’s great news for Iran’s oil developers — who now have more options than ever for tapping new crude supplies.
But it’s less welcome for the global crude markets. At a time when West Texas Intermediate has fallen below $50, and continues to see significant downward pressure.
New supplies from Iran won’t help that situation. Especially given the country is one of the few OPEC nations that still has room to increase exports under recently-agreed quotas. Watch for news on the ramp-up of production from South Pars, and for commissioning of additional projects here.
Here’s to a giant worry,