Speech of
H.E. Mr. Akbar Torkan

President & Chairman of the Board of Petropars Co. Ltd.

On

The Role of Petropars in Developing South Pars Gas Field

At the

Iran Energy Forum, London England
27 May 2002

In the name of God, the compassionate, the merciful

Mr. chairman,
Distinguished audience,
Ladies and gentlemen,

First I would like to thank you all for attending this forum and then thank those who made it possible. My presentation is about the role of Petropars in Developing South Pars Gas Field. In my speech first I will briefly address the status of gas reserves in the world and Iran. Then, after a short introduction to South Pars Gas Field, I will explain how Petropars is involved in that, and finally I will report on our main projects namely development of Phase 1, Phase 4 and 5, and Phase 6, 7 and 8 of South Pars.

According to BP Amoco, latest studies at the turn of the millennium show that the world gas reserves are distributed such that Iran with about 23 trillion cubic meters of gas reserves (almost 16% of world total) stands second to Russia. About half of the Iranian reserves are located offshore, of which the most part is attributed to South Pars Gas field.

South Pars, the largest offshore field in the world, is located on the Iran-Qatar border in the Persian Gulf and is shared by the two countries. Our southern neighbour, Qatar, refers to this field as North Dome. The unusually huge size of this reservoir makes it one of the largest and most reliable sources of energy for Iran and the rest of the world. With the flat or downward trend of oil consumption and up trend of natural gas consumption in the past 10 years in Iran, it is clear what are the priorities of the country. Oil production would continue and remain for the purpose of export and main source of government revenue. Petropars was incorporated in 1997 in British Virgin Islands as a clear response to this message.

Through three distinct EPC contracts with NIOC (National Iranian Oil Company), we are developing Phase One with contract value of $780 MM, Phase 4 and 5 (in partnership with Agip of Italy) worth $1928 MM, and Phase 6, 7 and 8 worth $1985MM with a total Capex of $4693 MM.

We entered the Market in 1998 as a General Contractor to manage and execute upstream oil and gas projects by utilising domestic capabilities and compete with other international companies in development of South Pars field. Our shareholders are the NIOC Pension Fund and the IDRO (Industrial Development & Renovation Organisation) Pension Fund with 60% and 40% of shares respectively. We have over 300 employees with expertise in various related technical fields.

Now I would like to tell you a little bit about each of our projects. Phase One is expected to produce 1,000,000,000 SCF of natural gas, 40,000 barrels of condensate and 200 tonnes of sulphurs on daily basis. The refined gas will be injected into Cross-Country Trunk Pipeline, IGAT-3. The work is broken into Offshore and Onshore sections. Offshore work is further broken into Platforms, Submarine pipeline and Single Buoy Mooring.

Platform work includes Topsides and Jackets, with Topside divided into Deck & Bridges and Flares. Onshore section is broken down into Process facilities, Utilities Facility, Condensate Storage Tanks, Telecommunications and operating base.

Phase One progress, as of April 2002, is as follows:

Drilling & completion of production wells: 94%, Topsides: 83%, Jackets: 59%, and Submarine Pipeline: 42%, with a total progress of 76% for the offshore part.

Similarly, progress breakdown for Onshore work are as follows:

Process facilities: 94%, Utility Facilities: 87%, Telecommunications: 97%, Operating Base: 100%, and Condensate Storage Tanks: 99.5%, with a total progress of 91%. This would reflect total progress for the project as 85%.

Current direct work force is around 7,500 people. Over 63% of dollar value has been awarded to Iranian sub-contractors. That would account for 95% of man-hour content of the project.

Our concrete coated Sub-sea pipeline includes a 105km of 32" line from production platform to the shore; 3km of 30" from shore to the single buoy mooring; and 5km of infield 18" pipeline from wellhead platforms to production platform. We have two drilling platforms: one with a 6-leg,
1,664 tonne jacket and an 800 tonnes topside referred to as SPD1. The other (satellite) platform, SPD2, is also a 6-leg jacket weighing 1,773 tonnes with a 1,300 tonnes topside.

There are two other platforms involved in this project that are not considered on the other phases. These are production platform and of the Total project, living quarter platforms. Production platform is a 6-leg jacket weighting 4,800 tonnes with a 7,200 Generation. Separation; Water Treatment; Mixing of Dry Living Quarter Platform, topside that weighs 4,400 accommodate 94 people.

Onshore Refinery work is divided into Process Plant and Utilities. Process Plant's major units are:

Gas Condensate Reception & Separation, Gas Sweetening by MDEA, Gas Dehydration by TEG, Mercaptane removal by mol. Sieve, hydrocarbon Dew pointing, Sulphur Recovery by clause method, Export Gas Decompression and condensate stabilisation. The Utility units are Power Generators: 120MW; Desalination Plant: 2x2M3/D; potable water: 90 M3/hr; Steam Generator: 160 tonne/hr; Nitrogen Generator: 646 NM3/hr; Instrument Air System: 6600 NM3/hr.

Phase 4 and 5 of the Project, as I said earlier it is a partnership with Eni's Agip division, an Italian company. Upon completion on a daily basis it produces:

Dry Gas: 2x1000 MMSCF; condensates: 2x40,000 barrels; Propane (C3): 1,770 tonnes' Butane (C4): 1,080 tonnes, Ethane (Petroleum Feedstock): 70 MMSCF.

The Offshore part of the project is made of two platforms, weighting 16,000 tonnes with 24 wells and 2 sets of submarine pipe line each 105km long and 32" Diameter. For the Onshore, we have Refinery Plant that includes Process and Utility facilities covering an area of 1,200,000m2, and
56" Pipeline connecting to IGAT-3 for a length of 75km.

Project Capex is $1928 MM and Progress for the project as of April 2002 has been reported as 7.3% for the Onshore Facilities, 13.1% for the Offshore facilities, 8.1% for the Production Wells, 100% for Conceptual and Basic Design, 98% for the Project Studies and 11.2% for the overall Project.

Phase 4 and 5 are scheduled to complete by July 2005. Phase 6, 7 and 8 are scheduled to complete by January 2006 with daily output of 2.8 billion SCF of Natural Gas, 122,000 bbl of Condensate and 3,300 tonnes of LPG. The natural gas output will be transported to the oil fields of Agha-Jari for well injection. The Offshore structure is made of 3 platforms 24,000 tonne, 3 submarine pipelines of 32", 105km long each, and three submarine pipelines of 4", 105km long as Piggy back for prohibitive chemical transportation, sitting on top of 32" line.

Onshore section consists of Refinery and 56" pipeline to Agha-Jari field, 512km long. Refinery Plant area covering an area of 1,400,000m2 that includes Process Plant and Utility Facilities. Current progress on this phases for the month of April is reported as .7% for the Onshore Facilities, 0% for the Offshore Facilities, 11.8% for the Production Wells, 88.5% for the Conceptual and Basic design with total progress on the project as 3.8%.

Thank you very much for listening.