Will Total deal pave way for other oil majors' return to Iran?
After six years, French oil giant Total has become the first major Western energy company to return to Iran in what Tehran hopes is only the first step in the reopening of the Iranian market.
TEHRAN, Iran — French energy giant Total SA is back in Iran, six years after it was forced to halt its operations due to nuclear-related sanctions on Tehran. Leading a consortium with China National Petroleum Corp (CNPC) and Petropars, the company signed a heads of agreement with the National Iranian Oil Company (NIOC) worth $4.8 billion to develop phase 11 of the giant South Pars natural gas field. The project is expected to produce 2 billion cubic feet of natural gas per day. The preliminary agreement, due to be finalized by early 2017, gives Total a 50.1% stake. Other consortium members CNPC and NIOC subsidiary Petropars will take 30% and 19.9%, respectively.
The gas field, which is divided into 29 development phases on the Iranian side, is the world’s largest. The combined Iranian and Qatari sections of the field contain an estimated 19% of global recoverable gas reserves. Qatar’s section is referred to as the North Dome.
In 1997, the French energy major signed a deal to develop phases two and three of South Pars together with Malaysia’s Petronas and Russia’s Gazprom. In 2004, Total and Petronas also agreed to develop phase 11. That project, however, was handed over to CNPC in 2009 after complaints by Iran about delays on the part of Total and Petronas. The Chinese company also failed to make any progress and eventually pulled out in 2012. The project remained stalled for years afterward, as none of the proposals by a number of Iranian companies were finalized.
Officials from Iran and Total have hailed the new deal. Total CEO Patrick Pouyanne said the agreement is “in the interests of the country and the partners.” Meanwhile, Iranian Oil Minister Bijan Namdar Zanganeh thanked Total “for coming back to Iran at a difficult time again.”
