To­tal signs Iran deal, de­fies US

Kuwait Times - - FRONT PAGE -

French en­ergy gi­ant To­tal de­fied US pres­sure yes­ter­day by sign­ing a multi-bil­lion-dol­lar gas deal with Iran, the first by a Euro­pean firm in more than a decade. To­tal will in­vest an ini­tial $1 bil­lion in the South Pars off­shore gas field as part of a con­sor­tium with Chi­nese and Ira­nian firms. The 20-year project, which will even­tu­ally see the firms in­ject $4.9 bil­lion, is by far the big­gest vote of con­fi­dence in the Is­lamic repub­lic since sanc­tions were lifted un­der a 2015 nu­clear deal with world pow­ers.

“To­day, for To­tal, is a his­toric day, the day we come back to Iran,” To­tal CEO Pa­trick Pouyanne said at the sign­ing cer­e­mony in Tehran. “We aren’t a po­lit­i­cal or­ga­ni­za­tion, but I hope this agree­ment will en­cour­age other com­pa­nies to come to Iran be­cause eco­nomic devel­op­ment is also a way of build­ing peace,” he told AFP. “We are here to build bridges, not walls,” he added. The project in South Pars, a field shared be­tween Iran and Qatar, is the first un­der a new Ira­nian Petroleum Con­tract which of­fers bet­ter terms to for­eign in­vestors but has faced in­tense crit­i­cism from hard­lin­ers who said it was too gen­er­ous.

Oil Min­is­ter Bi­jan Na­madar Zan­ganeh said the deal was a di­rect re­sult of mod­er­ate Pres­i­dent Has­san Rouhani’s re­sound­ing re-elec­tion vic­tory in May and strong pub­lic sup­port for re­build­ing ties with the West. “The peo­ple said firmly that our oil poli­cies should con­tinue,” he said. “We shall never for­get To­tal be­ing the fore­run­ner.” Zan­ganeh said Iran’s oil in­dus­try needs some $200 bil­lion in in­vest­ment over the next five years, and Euro­pean firms have been hun­grily eye­ing op­por­tu­ni­ties in a coun­try with the world’s sec­ond­largest gas re­serves and fourth-largest oil re­serves. But they have been cau­tious about in­vest­ing due to con­tin­u­ing US sanc­tions.

To­tal has ap­pointed a com­pli­ance of­fi­cer with the sole task of en­sur­ing it does not fall foul of US mea­sures against Iran. In par­tic­u­lar, it must pre­vent cash flow­ing to Iran’s elite Revo­lu­tion­ary Guards - a tall or­der given their ex­ten­sive and shad­owy pres­ence across the Ira­nian econ­omy. Just a fort­night ago, the US Se­nate over­whelm­ingly passed a bill tar­get­ing the Guards over their in­volve­ment in re­gional con­flicts and the coun­try’s bal­lis­tic mis­sile pro­gram. The White House is also in the midst of a 90-day re­view on whether to aban­don the nu­clear deal en­tirely, which Pres­i­dent Don­ald Trump threat­ened to do dur­ing his elec­tion cam­paign. The un­cer­tainty has been enough to de­ter global firms such as BP from dip­ping their toes in Ira­nian wa­ters, while Shell and Russia’s Gazprom have signed only pre­lim­i­nary deals to date.

Even with­out the threat of sanc­tions, in­vest­ing in the Ira­nian econ­omy is not for the faint-hearted. For­eign firms in Iran still face “per­va­sive cor­rup­tion... high levels of red tape; po­ten­tial for cur­rency in­sta­bil­ity (and) reluc­tance to al­low for­eign in­volve­ment within the do­mes­tic econ­omy,” con­sul­tancy firm BMI Re­search wrote in a brief­ing note yes­ter­day. For all that, Iran’s large pop­u­la­tion of mid­dle-class con­sumers presents an ir­re­sistible op­por­tu­nity for many busi­nesses in Europe and be­yond.

Any at­tempt to scup­per the nu­clear deal will likely face ma­jor push-back from its other sig­na­to­ries: Bri­tain, France, Ger­many, China and Russia. For­eign Min­is­ter Mo­ham­mad Javad Zarif was warmly re­ceived by EU lead­ers last month and tweeted that they were com­mit­ted to the nu­clear deal “de­spite reck­less US hos­til­ity”. At the sign­ing yes­ter­day, Pouyanne said “To­tal has a long his­tory in Iran,” point­ing to its devel­op­ment of phases two and three of South Pars in the 1990s.

It will take a 50.1 per­cent stake in the new phase 11 project, while China Na­tional Petroleum Cor­po­ra­tion (CNPC) will own 30 per­cent and Iran’s Petropars 19.9 per­cent. The aim is to start pump­ing into Iran’s do­mes­tic grid in 2021, even­tu­ally reach­ing 56.6 mil­lion cu m of gas per day. Ira­nian of­fi­cials said the prod­ucts would be worth a to­tal of $54 bil­lion at cur­rent prices. To­tal had signed up to de­velop phase 11 back in 2009 but was forced to aban­don its Ira­nian projects in 2012 when France joined Euro­pean Union part­ners and im­posed sanc­tions, in­clud­ing an oil em­bargo. —AFP

TEHRAN: Pa­trick Pouyanne (left), Chair­man and CEO of French en­ergy com­pany To­tal, shakes hands with Ez­za­tol­lah Ak­bari, Man­ag­ing Direc­tor of Petropars Group, af­ter sign­ing an off­shore gas field agree­ment yes­ter­day. — AFP (See Page 21)

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