Total: CNPC can be the replacment on project in Iran

French oil major Total said yesterday its exit from a $4.8 billion Iranian gas project was “ongoing” and that co-investor China National Petroleum Corporation had the right to take over its position.

“The contractual process is still ongoing and for our part, we have not been informed of an official CNPC position, but as we have always indicated, CNPC, a Chinese state-owned company, has the right to take over our participation if CNPC decides it,” Total said.

CNPC could not be reached for comment.

The agreement between Total, CNPC and local firm Petropars to develop phase 11 of South Pars, the world’s largest gasfield, has been left in disarray following the US decision to impose sanctions on Tehran.

The US introduced the first phase of sanctions over Tehran on August 6, with the full implementation targeting Iran’s energy industry ssheduled to come into force on November 4.

The phasing of sanctions has left Total, the biggest foreign investor in the beleaguered Iranian energy sector since the 2016 nuclear deal, scrambling for an exit, as initial attempts by the French oil company to secure waivers from the White House have not materialised.

On Saturday, conflicting reports emerged from two separate Iranian news agencies on the handover of the project to CNPC. An official of the stateowned National Iranian Oil Company’s was cited by two news agencies, Irna as well as the energy-focused Shana as offering contradictory comments on the status of Total in the project.

The former quoted Mohammad Mostafavi, NIOC director for investments, as saying that CNPC had replaced Total as lead investor, while Shana followed up with a story that there had been no change in the existing status quo.

However, analysts familiar with the Iranian hydrocarbons industry and decision-making suggested the discrepancy stemmed from the fact that Total was already in the final stages of its exit from Iran, but has to wait for official confirmation.

It was also an early indication that CNPC would be likely to remain committed to its Iranian investments, despite the looming threat of US sanctions.

Iran sits atop the world’s second biggest gas reserves after Russia, but is still reliant on imports from neighbouring Azerbaijan and Turkmenistan to help cope with harsh winters since its domestic infrastructure cannot meet rising local demand.

Last month, Total said oil production rose by 8.7 per cent to 2.717 million barrels of oil equivalent per day, driven by the early completion the Maersk Oil deal, and the ramp-up of several projects including Yamal LNG in Russia and Moho Nord in Congo.

It raised its production growth target to 7 per cent in 2018 from 6 per cent previously, expecting a boost from the start-up of its Kaombo North project in Angola, Egina in Nigeria, Australia’s Ichthys LNG and Tempa Rossa in Italy.

It said cost savings measures were on track to surpass the $4 billion target for the year and reach $4.bn over the 2014-18 period.