US-Iran sanctions give China lead in world’s top gas field
Golnar Motevalli
tehran — China National Petroleum Corp is expected to take the lead on a $5 billion project to develop Iran’s share of the world’s biggest gas deposit, taking over from France’s Total, which halted operations after US President Donald Trump reimposed sanctions on the Middle Eastern nation.
State-owned CNPC, which joined a consortium with Total and Iran’s Petropars 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
IRNA reported, citing Mohammad Mostafavi, National Iranian Oil’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 finalised its agreement with Iran in July 2017, had already spent some €40 million ($45.7 million) on the project when Trump announced in May that the US would exit the 2015 international nuclear deal with Iran and reimpose sanctions on Tehran. The first round of US sanctions was put back into place this week, with more to come in November, greatly complicating efforts by companies that rushed into Iran after the nuclear accord was signed by Iran, the US and five other countries plus the European Union.
Under the deal, Iran agreed to take steps to limit its nuclear programme,
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 Scores of European companies, including Total, have withdrawn from the oil-rich Arabian Gulf country since the US reversal. Trump marked the return of sanctions with a tweet on August 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 Total had previously withdrawn from the field in 2009 because of sanctions.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 $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 officer Patrick Pouyanne raised the prospect of Chinese groups joining Western companies in avoiding Iran due to sanctions.
“Within the US legal framework, we can’t work in Iran,” Pouyanne said on 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.”