Iran has announced $17 billion worth of contracts aimed at reversing a significant projected decline in output from South Pars, the world’s largest gas field. Spanning 3,700 square kilometers and holding an estimated 14.2 trillion cubic meters (tcm) of gas and 18 billion barrels of gas condensate, South Pars currently supplies nearly 80% of Iran’s total gas production and accounts for around 40% of the country’s estimated 33.8 tcm in gas reserves.
The field is part of a shared reservoir with Qatar, which controls the larger 6,000-square-kilometer North Dome (or North Field). While Iran faces a looming production shortfall, Qatar is aggressively expanding output through pressure-enhancement strategies—raising alarms in Tehran that Iranian production may suffer by comparison.
Iran’s Petroleum Ministry currently estimates that South Pars produces roughly 700 million cubic meters per day (mcm/d), but forecasts indicate a production decline of 28 million cubic meters annually starting in 2027—a rate of about 1% per year. This could worsen to 42 mcm annually after 2029. Internal assessments by Iran’s National Development Fund predict an overall 25% drop in gas output within a decade, with South Pars facing a 30% decline due to falling reservoir pressure.
The situation is even more dire, according to Mansour Daftarian, head of the Iranian Petroleum Institute, who warned that daily output could plummet to as low as 200 mcm/d by the end of 2026—posing a serious threat to domestic heating and industrial supply.
The success of the $17 billion initiative hinges on how effectively the contracted firms develop and maintain the field’s wells. A key challenge lies in the operational shift that occurred after the U.S. withdrew from the Joint Comprehensive Plan of Action (JCPOA) in 2018 and reimposed sanctions. Prior to that, Iran had collaborated with Qatar on joint development strategies to protect the reservoir’s long-term viability. But after foreign firms exited, domestic companies took over—often lacking the necessary expertise, technology, and equipment. Pressured to boost short-term output, many rushed drilling operations, compromising the structural integrity of the wells and, ultimately, future production.
Compounding the challenge is Iran’s shrinking pool of international partners. Despite signing a long-term strategic cooperation agreement with China in 2021, Beijing has scaled back its involvement under growing pressure from Washington and due to its own post-COVID economic struggles. Meanwhile, Russia—another potential ally—continues to grapple with economic fallout from its prolonged war in Ukraine and associated sanctions.
With fewer partners and limited access to foreign technology, Iran faces an uphill battle in maintaining gas output at South Pars. Whether the newly signed contracts will be enough to halt or reverse the decline remains uncertain—but the stakes are high for Iran’s energy security and economy.
