Controversial project involving petrochemicals in gas field development remains at a standstill

According to Energy Press, petrochemical companies have no gas for four months of the year; and soon it will be six months. To escape this impasse, they have set their sights on upstream and investing in gas fields, and as always, they have created a lot of controversy to achieve their demands.
In May of last year, the Ministry of Oil finally agreed to sign memorandums of understanding worth $6.4 billion with petrochemical holdings to develop 16 gas fields and extract 200 million cubic meters of gas.
But now, a year has passed and almost no progress has been made. No contract has been finalized, and no gas has been extracted.
What is the argument of the proponents?
Supporters of this plan believe that when petrochemical companies face gas shortages for months of the year, why shouldn’t they take action to supply themselves? Especially since many of these companies have the necessary capital and the development of small fields can both meet their needs and increase national production.
In an interview with Energy Press, Ali Shahroui, an energy expert, emphasized that this entry is not a choice, but a necessity, stating: In the coming years, petrochemicals may only operate at 50 percent of their capacity. This means the destruction of large investments. When they do not have guaranteed gas, they have no choice but to go upstream.
The Ministry of Oil’s resistance; where is the problem?
He continues: In exchange for investing in the development of fields, petrochemicals want to receive a guarantee that at least part of the produced gas will be delivered to them and that their gas will not be cut off in the winter. However, according to managers of several petrochemical companies, the Ministry of Oil has not even agreed to provide this guarantee in the draft contracts.
According to Shahroui, this contractual model destroys investment incentives and has caused hesitation among companies. Meanwhile, if only a guarantee of delivery of a percentage of the gas from the fields is given to the investors themselves, the private sector can advance projects without the need for government support.
Entering the upstream without expertise? Yes, but with conditions
On the other hand, critics warn that petrochemical companies have no experience in field development and that the cost may increase significantly by handing over projects to specialized contractors. However, experts like Shahroui emphasize that this problem can be solved and states in this regard: Petrochemical companies can cooperate with drilling and exploration companies in the form of a consortium. For example, Parsian Oil and Gas Holding has partnered with Petropars. The implementation models in the world are the same.