Iran says South Pars phase to come on stream soon

By Hashem Kalantari

TEHRAN, May 11 (Reuters) - A section of the huge South Pars gas field that is operated by StatoilHydro (STL.OL) will start production soon, a senior Iranian energy official said on Sunday, after a two-year delay of the $2.7 billion project.

Mohammad-Javad Shams, board member of the Pars Oil and Gas Company, was speaking a day after Royal Dutch Shell RDSa.l said it had pulled out of developing another phase of South Pars, after pressure not to participate from U.S. lawmakers.

Washington is spearheading a drive to isolate Tehran over its disputed nuclear ambitions. Western powers fear Iran is seeking to build nuclear bombs. Tehran rejects the charge.

Shams declined to comment on Saturday's statement by a Shell spokeswoman but said South Pars phase eight would start up in the Iranian month that begins on June 21, followed by phases six and seven. Statoil handles the offshore part of the project.

He said they would reach full production capacity of 1.3 billion cubic feet (33.8 million cubic metres) each of natural gas per day by the end of the 2008-09 Iranian year next March.

"(This) is about 300 million cubic feet above the yield from other phases which stands at one billion cubic feet a day," said Shams, who is project manager of South Pars' phases 6-8.

Shell, Spain's Repsol (REP.MC) and the National Iranian Oil Company (NIOC) signed a Memorandum of Understanding in January 2002 to develop phase 13 in a project to be known as Persian LNG.

At the time, Shell said deliveries of liquefied natural gas -- gas cooled to liquid under pressure for transportation in special tankers -- could begin in 2007.