CNPC, To­tal ink Iran joint ven­ture

JV is the first af­ter United Na­tions sanc­tions were eased onMideast na­tion

China Daily (USA) - - BUSINESS - By BLOOMBERG

Iran signed a $4.8 bil­lion nat­u­ral gas de­vel­op­ment project with en­ergy gi­ants To­tal SA and China Na­tional Pe­tro­leum Corp, mark­ing the first joint ven­ture with in­ter­na­tional part­ners since UN sanc­tions on the na­tion were eased in Jan­uary.

Paris-based To­tal will con­trol 50.1 per­cent in the project, with CNPC tak­ing 30 per­cent and Iran’s Petropars the rest. The deal, for the 11th phase of the off­shore South Pars gas field, is still pre­lim­i­nary, with both sides sign­ing a “heads up agree­ment”, ac­cord­ing to Gho­lam-Reza­Manouchehri, deputy di­rec­tor of the Na­tional Ira­nian Oil Co.

To­tal put the cost of the first phase of the project at $2 bil­lion, with To­tal’s share at $1 bil­lion, Chief Ex­ec­u­tive Of­fi­cer Pa­trick Pouyanne said on Tues­day.

“It’s def­i­nitely in the in­ter­ests of the coun­try and now the part­ners to fi­nal­ize the con­tract pro­duc­tion,” he said Ho­may­oun Falak­shahi, at a sign­ing cer­e­mony Te­heran on Tues­day.

Iran has the world’s big­gest nat­u­ral gas re­serves, es­ti­mated by BP Plc at 34 tril­lion cu­bic me­ters. The off­shore South Pars gas field is Iran’s sec­tion of the world’s big­gest de­posit, also shared with Qatar. Iran is seeking to re­vive an en­ergy in­dus­try crip­pled by in­ter­na­tional sanc­tions.

The agree­ment sig­nals that the coun­try is try­ing to fast­track projects to boost oil and gas pro­duc­tion amid low prices, an­a­lysts said.

“Iran wants to go very quickly and they are look­ing to sign agree­ments as soon as pos­si­ble,” said Ho­may­oun Falak­shahi, in a spe­cial­ist on the Ira­nian oil in­dus­try at con­sul­tant Wood Macken­zie Ltd in Lon­don. The project is the first to be signed with an in­ter­na­tional oil com­pany since Iran de­vel­oped new oil con­tract pro­ce­dures to at­tract for­eign in­vest­ment. Te­heran ear­lier signed an agree­ment with a do­mes­tic com­pany, Per­sia Oil & Gas Co, us­ing the new con­tracts.

Alas­tair Syme, an oil an­a­lyst at Cit­i­group Inc in Lon­don, de­scribed the South Pars deal as “at­trac­tive,” es­ti­mat­ing it would de­liver re­turns of 19 per­cent for To­tal. In Iran’s pre­vi­ous buy­back deals, which for­eign groups dis­liked and which were used in the late 1990sandear­ly2000s, com­pa­nies of­ten achieved sin­gle-digit re­turns.

Still, com­pa­nies are likely to be wary about in­vest­ing in Iran too quickly, or too much. “While the project terms look at­trac­tive, the po­lit­i­cal his­tory clearly war­rants lim­it­ing ex­po­sure,” Syme said.

To­tal was work­ing on de­vel­op­ing the South Pars gas project un­til sanc­tions de­signed to halt the na­tion’s nu­clear pro­gram forced the com­pany to pull out in 2009. “I thank To­tal for re­turn­ing,” Iran’s OilMin­is­ter Bi­jan Nam­dar Zan­ganeh said.

Iran­wants to go very quickly and they are look­ing to sign agree­ments as soon as pos­si­ble.”

a spe­cial­ist on the Ira­nian oil in­dus­try at con­sul­tan­tWood Macken­zie Ltd in Lon­don

REUTERS

A worker walks at a unit of South Pars Gas field in Asa­louyeh Sea­port, Iran.

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