France’s Total SA has signed a 20-year gas contract worth US$5bn with Iran, aiming to develop the country’s biggest South Pars gas field, with a targeted production capacity of two billion cubic feet per day including condensate
Total will be the lead operator with China National Petroleum Corporation (CNPC) to develop Iran’s South Pars Phase 11 consortium.
Total holds a 50.1 per cent stake in the South Pars gas field, with CNPC holding a share of 30 per cent and Iran’s Petropars 19.9 per cent.
Patrick Pouyanne, CEO and Chairman of Total, said, “This project is in line with the group’s strategy to expand its presence in the Middle East and grow its gas portfolio by adding low cost, long plateau assets.”
Homayoun Falakshahi, senior research analyst for Middle East and North Africa Upstream at Wood Mackenzie, said, “The South Pars Phase 11 deal will, Iran hopes, prompt other IOCs to re-enter the country’s upstream sector. Reopening the Iranian upstream to foreign investors could very well become one of President Hassan Rouhani's main economic achievements.”
As per the deal, Total is expected to install 20,000-tonne compressor platforms at the South Pars.
The deal was planned several months ago, but was prolonged due to the rising global tensions, as many banks refused to deal with Iran.
Falakshahi further added, “Phase 11 opens a new chapter in the story of the South Pars. It closes the 24-phase development plan, and sets the stage for future phases, as compressor platforms are needed for the first time.”
In Iran, Total was one of the biggest investors before international sanctions were imposed in 2006 over suspicions of Iran’s involvement in developing nuclear arms. The sanctions imposed on Iran in 2010 triggered the cancellation of three LNG projects in the country involving Total, Shell, Repsol, OMV and CNOOC.
With the South Pars deal, Iran is aiming to increase the gas supply for the country’s domestic market.
