On September 29, 1997, Total signed a $2 billion deal (along with Russia's Gazprom and Malaysia's Petronas) to explore South Pars and to help develop the field during Phase 2 and 3 of its development. NIOC estimates that South Pars has a gas production potential of up to 8 billion cubic feet per day (Bcf/d) from four individual reservoirs. The company has a three-phase development for South Pars. Phase I, currently scheduled for completion by the end of 2000, involves production of 900 million cubic feet per day (Mmcf/d) of natural gas and 40,000 bbl/d of condensate. This first phase is being carried out by the Petroleum Development and Engineering Company (PEDEC), an affiliate of NIOC.

In March 1997, Iranian Oil Minister Gholamreza Aghazadeh stated that the three-phase South Pars development would proceed concurrently, with the three phases combined yielding 3 Bcf/d of gas, 120,000 bbl/d of condensate, and $3.5 billion a year in revenues when completed in 2001 or 2002. NIOC is developing Phase 1 of the overall project, while Total's consortium is responsible for Phases 2 and 3. Several firms are pursuing a buyback contract for South Pars Phases 4 and 5. One group includes Shell, Petronas, Gaz de France and Britain's BG; Australia's BHP and Russia's Gazprom are also competing for the project. All told, South Pars is expected to produce $35-$40 billion worth of gas over a 30-year period. According to the OPEC News Agency, a total of $930 million has been invested in the construction of the South Pars refinery. The construction was 21% completed in December 1998, and the plant is scheduled to be finished in 2001. The refinery is expected to generate $240 million in annual sales of gas liquids, sulfur and natural gas.

In addition to South Pars, Iran aims to develop the 6.4-Tcf, non-associated Khuff (Dalan) reservoir of the Salman oil field. Salman straddles Iran's maritime border with Abu Dhabi, where it is known as the Abu Koosh field. NIOC is seeking to develop the Khuff reservoir, which could lead to the production of 500 Mmcf/d of non-associated gas, along with the 120,000 bbl/d of crude oil that is now being produced from a shallower reservoir. Salman gas could either be exported to Dubai's Jebel Ali or to domestic locations at Qeshm Island and Badar Mogham. The project cost is estimated at slightly under $600 million for a two-platform development.

The 47-Tcf North Pars development will be integral to Iran's long-term gas utilization plans. In early 1994, Shell completed a feasibility study on the field. Development plans call for 3.6 Bcf/d of gas production, of which 1.2 Bcf/d would be re-injected into the onshore Gachsaran, Bibi Hakimeh, and Binak oil fields. The other 2.4 Bcf/d would be sent to the more mature Agha Jari oil field. Negotiations on the field stalled in 1995, but Shell reportedly renewed its interest in 1998.

In 1997, Iran and Oman agreed to joint development of the Henjam E (HE) field, which shares the same geological structure as Oman's Bukha West field. HE/Bukha West contains an estimated 1.15 Tcf of natural gas and about 80 million barrels of condensate. Production terms will be on an 80:20 basis, in favor of Iran. Two discovery wells have been drilled on the structure, in HE in the 1970s and in Bukha West in the 1980s. Eventual production could be tied to Oman's Bukha gas field farther south. The HE field may be offered to private investors under NIOC's proposed second round of buyback contracts.

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