Japan makes deal with Iran, Qatar on vast natural gas fields

Yomiuri Shimbun ^ | 2002-09-21

[Lessismore]

The Japanese, Iranian and Qatari governments have reached a basic agreement to allow a Japanese consortium and multinational companies to develop natural gas resources in Iran's Pars South and Qatar's North Field, sources close to the government said Friday.

Pars South and the adjacent North Field are respectively the largest and second largest natural gas reserves in the world.

The consortium and other firms plan in 2005 or 2006 to begin using gas harvested from the two gas fields to produce liquefied fuel, or gas-to-liquid (GTL) products, such as light oil, gasoline and kerosene, which will be exported to Japan, the sources said.

The combined total cost for the projects will amount to more than 500 billion yen, the largest natural gas development projects Japan has ever undertaken, the sources said.

The Japanese consortium will be responsible for production of nearly 50 percent or more than 10 million cubic meters of natural gas per day in the Pars South gas field, but will negotiate with the Qatari government on the amount it will produce from the North Field gas field, the sources said.

When production from the two gas fields go into operation, the ratio of natural gas to be used in Japan will likely to go up from the current 13 percent to more than 23 percent, the sources said.

Because it emits less carbon dioxide when burned than petroleum or coal, natural gas is considered a major energy for the 21st century.

The envisaged projects will likely significantly change Japan's energy structure, which has depended on petroleum.

Economy, Trade and Industry Minister Takeo Hiranuma will reach a formal agreement in his meeting with Iranian Oil Minister Bijan Namdar-Zangeneh and Qatari Energy and Industry Minister Abdullah Bin Hamad al-Attiyah, who will come to Japan to attend the 8th International Energy Forum that begins on Saturday in Osaka.

Pars South is located in Iranian territory and North Field in Qatar to the south of Iran.

Proved gas reserves in Pars South are 13 trillion cubic meters and 9.8 trillion cubic meters in North Field.

Multinational companies, including state-run firms, are developing gas in the two gas fields. As the new projects' development scales are much larger than the current ones, the two fields will be the main suppliers, the sources said.

Japan's INPEX Corporation (former Indonesia Petroleum), Japan National Oil Corp. and JGC Corp. will be the key developers, but an Iranian state-run company and British and Dutch multinational companies, such as the Royal Dutch/Shell, will also take part in the projects.

The ministry plans to provide subsidies to assist the two projects, the sources said.

According to the projects plans, along with the development of the gas fields, factories to produce GTL products will be built on the shores of the Gulf.

Construction of a factory in Qatar will begin next year and operations will start in 2005.