Iran signs R64bn gas deal with Total and Chinese corporation

IRAN signed a deal with France’s Total yesterday to develop a major offshore gas field, its first big contract with a Western energy firm since sanctions were loosened in January.

Total will lead a consortium – also including the China National Petroleum Corporation (CNPC) and Iran’s Petropars – to develop phase 11 of the South Pars field under a 20-year contract worth $4.8-billion (R64billion).

The project will eventually supply 50.9 million cubic metres of gas a day into Iran’s national grid.

It also marks a breakthrough in the oil ministry’s efforts to attract Western investment and know-how to improve its outdated energy infrastructure.

The companies involved signed a memorandum of understanding in Tehran yesterday. The final agreement will be signed early next year.

Iran’s vice-minister for oil, Amir Hossein Zamani Nia, said another major deal with a European company would be signed in two to three weeks.

Iran has the secondlargest gas reserves and fourth-largest oil reserves in the world.

Total helped develop phases two and three of South Pars, but left Iran four years ago when France joined European Union partners in imposing sanctions, including an oil embargo.

“We’re the first Western major to return to Iran. We’re very happy,” Total chairman Patrick Pouyanne said.

Iran’s Oil Minister, Bijan Zanganeh, thanked Total and the CNPC for working with Iran despite difficult conditions.

“I hope the international companies that are still hesitating to come to Iran will be encouraged to take the leap,” he said. – AFP