U.S. sanc­tions on Iran give China an open­ing in world’s top gas field

The Globe and Mail (Ottawa/Quebec Edition) - - REPORT ON BUSINESS - GOL­NAR MOTE­VALLI

China Na­tional Pe­tro­leum Corp. is ex­pected to take the lead on a US$5-bil­lion project to de­velop Iran’s share of the world’s big­gest gas de­posit, tak­ing over from France’s To­tal SA, which halted op­er­a­tions af­ter U.S. Pres­i­dent Don­ald Trump reim­posed sanc­tions on the Is­lamic Repub­lic.

State-owned CNPC, which joined a con­sor­tium with To­tal and Iran’s Petropars Ltd. in 2016 to de­velop Phase 11 of the South Pars Gas field, is set to in­crease its stake in the project from the current 30 per cent. To­tal had orig­i­nally agreed to take a 50.1-per-cent in­ter­est.

CNPC will be­come the lead op­er­at­ing part­ner, the state-run Is­lamic Repub­lic News Agency re­ported, cit­ing Mo­ham­mad Mostafavi, Na­tional Ira­nian Oil Co.’s in­vest­ments and busi­ness head. Terms of the con­tract haven’t yet of­fi­cially changed, ac­cord­ing to Shana, the Oil Min­istry’s news service.

Calls to CNPC went unan­swered on Sun­day. To­tal de­clined to com­ment.

To­tal, which fi­nal­ized its agree­ment with Iran in July, 2017, had al­ready spent some €40- million( US $45.7- million) on the project when Mr. Trump an­nounced in May that the United States would exit the 2015 in­ter­na­tional nu­clear deal with Iran and reim­pose sanc­tions on Tehran. The first round of U.S. sanc­tions was put back into place this week, with more to come in Novem­ber, greatly com­pli­cat­ing ef­forts by com­pa­nies that rushed into the Is­lamic

Repub­lic af­ter the nu­clear ac­cord was signed by Iran, the United

States and five other coun­tries plus the Euro­pean Union.

Un­der the deal, Iran agreed to take steps to limit its nu­clear pro­gram, and to sub­mit to ver­i­fi­ca­tion by the In­ter­na­tional Atomic

En­ergy Agency in re­turn for economic sanc­tions re­lief.

Scores of Euro­pean com­pa­nies, in­clud­ing To­tal, have with­drawn from the oil-rich Per­sian Gulf coun­try since the U.S. re­ver­sal. Mr. Trump marked the re­turn of sanc­tions with a tweet on Aug. 7: “Any­one do­ing busi­ness with Iran will NOT be do­ing busi­ness with the United States.”

Iran, which holds the world’s largest nat­u­ral-gas re­serves, shares South Pars, also known as the North Dome field, with neigh­bour­ing Qatar. To­tal had pre­vi­ously with­drawn from the field in 2009 be­cause of sanc­tions. It planned ini­tial in­vest­ment of US$1-bil­lion for Phase 11, with the aim of even­tu­ally pro­duc­ing two bil­lion cu­bic feet a day, or 400,000 bar­rels of oil equiv­a­lent in­clud­ing con­den­sate, it said in July, 2017. At the time, To­tal said the con­tract was for 20 years.

Last month, chief ex­ec­u­tive Pa­trick Pouyanné raised the prospect of Chi­nese groups join­ing West­ern com­pa­nies in avoid­ing Iran due to sanc­tions .“Within the U.S. le­gal frame­work, we can’t work in Iran ,” Mr. Pouyanné said July 7. “It’s im­pos­si­ble for a com­pany like ours, and for most or even all global com­pa­nies, even maybe the Chi­nese. Our part­ners haven’ t told us yet that they will take over our stake in our project.”

CNPC has been ac­tive in Iran since 2004, op­er­at­ing in oil, gas and oil-field ser­vices, ac­cord­ing to the com­pany’s web­site. In 2006, it was awarded a three-year con­tract to pro­vide off­shore well-log­ging and other ser­vices at South Pars.

Iran, which holds the world’s largest nat­u­ral-gas re­serves, shares South Pars, also known as the North Dome field, with neigh­bour­ing Qatar.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.