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July 4, 2017

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Iran signs landmark US$5b gas deal with Total

Source: AP | 00:01 UTC+8 July 4, 2017 | Print Edition

IRAN yesterday signed a US$5 billion agreement with France’s Total SA and a Chinese oil company to develop its massive offshore natural gas field, the first such deal with foreign companies since the landmark 2015 nuclear deal with world powers.

Officials in Tehran signed the agreement, which will see the firms develop a portion of the massive South Pars offshore field that Iran shares with Qatar.

Total has a 50.1-percent share in the deal. The state-owned China National Petroleum Corp has 30-percent stake and Iran’s Petropars has 19.9 percent.

The development at phase 11 of the South Pars field will see 20 wells and two wellhead platforms built and connected to existing facilities by two underwater pipelines, Total said. A second phase will involve the construction of offshore compression facilities.

The project will have a capacity of 2 billion cubic feet — or 400,000 barrels of oil equivalent — of natural gas a day, including condensate.

“This is a major agreement for Total, which officially marks our return to Iran to open a new page in the history of our partnership with the country,” Total chairman and CEO Patrick Pouyanne said. “Total will develop the project in strict compliance with applicable national and international laws.”

Iranian Oil Minister Bijan Zanganeh said the deal would lead to “more than US$5 billion in foreign investment.” He also held out a hand to US oil companies, saying his country needs US$200 billion of investment in its oil industry in the next five years to make up for time lost during sanctions. Iran hopes to produce 6 million barrels of crude oil and condensates a day in five years, he said, up from 3.6 million now.

“We do not consider any obstacle for the participation of American companies,” Zanganeh said. “The main obstacle is being created by the US government.”

Iran has the world’s fourth-largest oil reserves and the second-biggest stores of natural gas. Since the nuclear deal, which saw Iran limit its enrichment of uranium in exchange for sanctions being lifted, the country has boosted crude production and sold what it had in reserves.

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