Iran signs $5B gas deal with France’s Total SA and a Chinese oil firm
TEHRAN, Iran — Iran on Monday signed a $5-billion US agreement with France’s Total SA and a Chinese oil company to develop its massive offshore natural gas field, the first such deal with foreign companies since the landmark 2015 nuclear deal with world powers.
Officials met in Tehran and signed the agreement, which will see the firms develop a portion of the massive South Pars offshore field that Iran shares with Qatar. Qatar calls the same area the North Field and it provides the small country, now in the middle of a diplomatic crisis with four other Arab states, its incredible wealth.
Total has a 50.1 per cent share in the new Iran deal. The stateowned China National Petroleum Corp. has 30 per cent stake and Iran’s Petropars has 19.9 per cent.
The development at phase 11 of the South Pars field will see 20 wells and two wellhead platforms built and connected to existing facilities by two underwater pipelines, Total said. A second phase will involve the construction of offshore compression facilities, the firm said.
Total said the project will have a capacity of two billion cubic feet of natural gas a day or 400,000 barrels of oil equivalent per day, including condensate.
“This is a major agreement for Total, which officially marks our return to Iran to open a new page in the history of our partnership with the country,” Total chairman and CEO Patrick Pouyanne said in a statement.
“Total will develop the project in strict compliance with applicable national and international laws.”
During the ceremony, Iranian Oil Minister Bijan Zanganeh congratulated all involved in the deal, saying it will lead to “more than $5 billion US in foreign investments.” He also described it as “one of the outcomes of the nuclear deal and recent presidential election,” which saw moderate President Hassan Rouhani re-elected over a hardline challenger.
Zanganeh also held out a hand to U.S. oil companies, saying his country needs about $200 billion US of investments in its oil industry in the next five years to make up for time lost during sanctions. Iran hopes to produce six million barrels of crude oil and condensates a day in five years, he said, up from about 3.6 million today.
“We do not consider any obstacle for the participation of American companies,” Zanganeh said. “The main obstacle is being created by the U.S. government.”
Iran sits atop the world’s fourth-largest oil reserves and the second-biggest stores of natural gas. Since the nuclear deal, which saw Iran limiting its enrichment of uranium in exchange for economic sanctions being lifted, the country has quickly boosted its crude oil production and sold what it had in floating reserves. Monday’s deal will further boost its coffers and secure a new supply of natural gas for domestic consumption, beginning in 2021.
The 20-year contract also offers a vote of confidence for Iran in the business world, especially as U.S. President Donald Trump has threatened to try to renegotiate the nuclear accord.